Oklahoma | 73-1520922 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
100 West Fifth Street, Tulsa, OK | 74103 |
(Address of principal executive offices) | (Zip Code) |
Page No. | ||
$2.5 Billion Credit Agreement | ONEOK’s $2.5 billion revolving credit agreement, effective June 30, 2017 |
AFUDC | Allowance for funds used during construction |
Annual Report | Annual Report on Form 10-K for the year ended December 31, 2017 |
ASU | Accounting Standards Update |
Bbl | Barrels, 1 barrel is equivalent to 42 United States gallons |
BBtu/d | Billion British thermal units per day |
Bcf | Billion cubic feet |
Bcf/d | Billion cubic feet per day |
CFTC | U.S. Commodity Futures Trading Commission |
Clean Air Act | Federal Clean Air Act, as amended |
DJ | Denver-Julesburg |
EBITDA | Earnings before interest expense, income taxes, depreciation and amortization |
EPA | United States Environmental Protection Agency |
Exchange Act | Securities Exchange Act of 1934, as amended |
FERC | Federal Energy Regulatory Commission |
GAAP | Accounting principles generally accepted in the United States of America |
Intermediate Partnership | ONEOK Partners Intermediate Limited Partnership, a wholly owned subsidiary of ONEOK Partners, L.P. |
LIBOR | London Interbank Offered Rate |
MBbl/d | Thousand barrels per day |
MDth/d | Thousand dekatherms per day |
Merger Transaction | The transaction, effective June 30, 2017, in which ONEOK acquired all of ONEOK Partners’ outstanding common units not already directly or indirectly owned by ONEOK |
MMBbl | Million barrels |
MMBtu | Million British thermal units |
MMcf/d | Million cubic feet per day |
Moody’s | Moody’s Investors Service, Inc. |
Natural Gas Act | Natural Gas Act of 1938, as amended |
NGL(s) | Natural gas liquid(s) |
NGL products | Marketable natural gas liquid purity products, such as ethane, ethane/propane mix, propane, iso-butane, normal butane and natural gasoline |
NYMEX | New York Mercantile Exchange |
NYSE | New York Stock Exchange |
ONEOK | ONEOK, Inc. |
ONEOK Partners | ONEOK Partners, L.P. |
OPIS | Oil Price Information Service |
PHMSA | United States Department of Transportation Pipeline and Hazardous Materials Safety Administration |
POP | Percent of Proceeds |
Quarterly Report(s) | Quarterly Report(s) on Form 10-Q |
Roadrunner | Roadrunner Gas Transmission, LLC, a 50 percent-owned joint venture |
S&P | S&P Global Ratings |
SCOOP | South Central Oklahoma Oil Province, an area in the Anadarko Basin in Oklahoma |
SEC | Securities and Exchange Commission |
Series E Preferred Stock | Series E Non-Voting, Perpetual Preferred Stock, par value $0.01 per share |
STACK | Sooner Trend Anadarko Canadian Kingfisher, an area in the Anadarko Basin in Oklahoma |
Tax Cuts and Jobs Act | H.R. 1, the tax reform bill, signed into law on December 22, 2017 |
Term Loan Agreement | ONEOK Partners’ senior unsecured three-year $1.0 billion term loan agreement dated January 8, 2016, as amended |
Topic 606 | Accounting Standards Update 2014-09, “Revenue from Contracts with Customers” |
West Texas LPG | West Texas LPG Pipeline Limited Partnership and Mesquite Pipeline |
WTI | West Texas Intermediate |
WTLPG | West Texas LPG Pipeline Limited Partnership, an 80 percent-owned joint venture |
XBRL | eXtensible Business Reporting Language |
ONEOK Inc. and Subsidiaries | ||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
(Unaudited) | 2018 | 2017 | ||||||
(Thousands of dollars, except per share amounts) | ||||||||
Revenues | ||||||||
Commodity sales | $ | 2,820,004 | $ | 2,216,717 | ||||
Services | 282,073 | 532,894 | ||||||
Total revenues | 3,102,077 | 2,749,611 | ||||||
Cost of sales and fuel (exclusive of items shown separately below) | 2,368,026 | 2,143,843 | ||||||
Operations and maintenance | 181,181 | 162,052 | ||||||
Depreciation and amortization | 104,237 | 99,419 | ||||||
General taxes | 29,023 | 27,153 | ||||||
(Gain) loss on sale of assets | (89 | ) | 7 | |||||
Operating income | 419,699 | 317,137 | ||||||
Equity in net earnings from investments (Note I) | 40,187 | 39,564 | ||||||
Allowance for equity funds used during construction | 230 | 13 | ||||||
Other income | 738 | 4,341 | ||||||
Other expense | (3,309 | ) | (3,467 | ) | ||||
Interest expense (net of capitalized interest of $2,038, and $1,441, respectively) | (115,725 | ) | (116,462 | ) | ||||
Income before income taxes | 341,820 | 241,126 | ||||||
Income taxes | (75,771 | ) | (54,941 | ) | ||||
Net income | 266,049 | 186,185 | ||||||
Less: Net income attributable to noncontrolling interests | 1,541 | 98,824 | ||||||
Net income attributable to ONEOK | 264,508 | 87,361 | ||||||
Less: Preferred stock dividends | 275 | — | ||||||
Net income available to common shareholders | $ | 264,233 | $ | 87,361 | ||||
Basic earnings per common share | $ | 0.65 | $ | 0.41 | ||||
Diluted earnings per common share | $ | 0.64 | $ | 0.41 | ||||
Average shares (thousands) | ||||||||
Basic | 409,676 | 211,619 | ||||||
Diluted | 412,173 | 213,602 | ||||||
Dividends declared per share of common stock | $ | 0.77 | $ | 0.615 |
ONEOK, Inc. and Subsidiaries | ||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
(Unaudited) | 2018 | 2017 | ||||||
(Thousands of dollars) | ||||||||
Net income | $ | 266,049 | $ | 186,185 | ||||
Other comprehensive income (loss), net of tax | ||||||||
Unrealized gains (losses) on derivatives, net of tax of $(10,312) and $(4,401), respectively | 34,524 | 24,456 | ||||||
Realized (gains) losses on derivatives recognized in net income, net of tax of $(3,578) and $(3,365), respectively | 11,976 | 17,283 | ||||||
Change in pension and postretirement benefit plan liability, net of tax of $(781) and $(1,360), respectively | 2,615 | 2,041 | ||||||
Other comprehensive income (loss) on investments in unconsolidated affiliates, net of tax of $(844) and $(58), respectively | 2,824 | 325 | ||||||
Total other comprehensive income (loss), net of tax | 51,939 | 44,105 | ||||||
Comprehensive income | 317,988 | 230,290 | ||||||
Less: Comprehensive income attributable to noncontrolling interests | 1,541 | 127,641 | ||||||
Comprehensive income attributable to ONEOK | $ | 316,447 | $ | 102,649 |
ONEOK, Inc. and Subsidiaries | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
March 31, | December 31, | |||||||
(Unaudited) | 2018 | 2017 | ||||||
Assets | (Thousands of dollars) | |||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 17,474 | $ | 37,193 | ||||
Accounts receivable, net | 844,218 | 1,202,951 | ||||||
Materials and supplies | 98,695 | 90,301 | ||||||
Natural gas and natural gas liquids in storage | 185,298 | 342,293 | ||||||
Commodity imbalances | 38,993 | 38,712 | ||||||
Other current assets | 106,067 | 53,008 | ||||||
Total current assets | 1,290,745 | 1,764,458 | ||||||
Property, plant and equipment | ||||||||
Property, plant and equipment | 15,838,443 | 15,559,667 | ||||||
Accumulated depreciation and amortization | 2,960,254 | 2,861,541 | ||||||
Net property, plant and equipment | 12,878,189 | 12,698,126 | ||||||
Investments and other assets | ||||||||
Investments in unconsolidated affiliates | 997,380 | 1,003,156 | ||||||
Goodwill and intangible assets | 990,485 | 993,460 | ||||||
Deferred income taxes | 116,120 | 205,907 | ||||||
Other assets | 159,428 | 180,830 | ||||||
Total investments and other assets | 2,263,413 | 2,383,353 | ||||||
Total assets | $ | 16,432,347 | $ | 16,845,937 |
ONEOK, Inc. and Subsidiaries | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Continued) | ||||||||
March 31, | December 31, | |||||||
(Unaudited) | 2018 | 2017 | ||||||
Liabilities and equity | (Thousands of dollars) | |||||||
Current liabilities | ||||||||
Current maturities of long-term debt (Note D) | $ | 932,650 | $ | 432,650 | ||||
Short-term borrowings (Note D) | — | 614,673 | ||||||
Accounts payable | 773,054 | 1,140,571 | ||||||
Commodity imbalances | 124,687 | 164,161 | ||||||
Accrued interest | 97,525 | 135,309 | ||||||
Other current liabilities | 122,922 | 179,971 | ||||||
Total current liabilities | 2,050,838 | 2,667,335 | ||||||
Long-term debt, excluding current maturities (Note D) | 7,091,751 | 8,091,629 | ||||||
Deferred credits and other liabilities | ||||||||
Deferred income taxes | 53,805 | 52,697 | ||||||
Other deferred credits | 366,701 | 348,924 | ||||||
Total deferred credits and other liabilities | 420,506 | 401,621 | ||||||
Commitments and contingencies (Note J) | ||||||||
Equity (Note E) | ||||||||
ONEOK shareholders’ equity: | ||||||||
Preferred stock, $0.01 par value: issued 20,000 shares at March 31, 2018 and December 31, 2017 | — | — | ||||||
Common stock, $0.01 par value: authorized 1,200,000,000 shares, issued 445,016,234 shares and outstanding 411,073,529 shares at March 31, 2018; issued 423,166,234 shares and outstanding 388,703,543 shares at December 31, 2017 | 4,450 | 4,232 | ||||||
Paid-in capital | 7,735,173 | 6,588,878 | ||||||
Accumulated other comprehensive loss (Note F) | (174,692 | ) | (188,530 | ) | ||||
Retained earnings | — | — | ||||||
Treasury stock, at cost: 33,942,705 shares at March 31, 2018, and 34,462,691 shares at December 31, 2017 | (863,485 | ) | (876,713 | ) | ||||
Total ONEOK shareholders’ equity | 6,701,446 | 5,527,867 | ||||||
Noncontrolling interests in consolidated subsidiaries | 167,806 | 157,485 | ||||||
Total equity | 6,869,252 | 5,685,352 | ||||||
Total liabilities and equity | $ | 16,432,347 | $ | 16,845,937 |
ONEOK, Inc. and Subsidiaries | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
(Unaudited) | 2018 | 2017 | ||||||
(Thousands of dollars) | ||||||||
Operating activities | ||||||||
Net income | $ | 266,049 | $ | 186,185 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 104,237 | 99,419 | ||||||
Equity in net earnings from investments | (40,187 | ) | (39,564 | ) | ||||
Distributions received from unconsolidated affiliates | 41,095 | 39,520 | ||||||
Deferred income taxes | 74,890 | 53,397 | ||||||
Share-based compensation expense | 7,203 | 5,907 | ||||||
Pension and postretirement benefit expense, net of contributions | (8,393 | ) | (5,018 | ) | ||||
Allowance for equity funds used during construction | (230 | ) | (13 | ) | ||||
(Gain) loss on sale of assets | (89 | ) | 7 | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 358,733 | 137,586 | ||||||
Natural gas and natural gas liquids in storage | 149,825 | (53,305 | ) | |||||
Accounts payable | (361,008 | ) | (122,843 | ) | ||||
Commodity imbalances, net | (39,755 | ) | 1,888 | |||||
Settlement of exit activities liabilities | (1,580 | ) | (4,119 | ) | ||||
Accrued interest | (37,784 | ) | (22,363 | ) | ||||
Risk-management assets and liabilities | 34,387 | 45,977 | ||||||
Other assets and liabilities, net | (52,072 | ) | (53,571 | ) | ||||
Cash provided by operating activities | 495,321 | 269,090 | ||||||
Investing activities | ||||||||
Capital expenditures (less allowance for equity funds used during construction) | (264,467 | ) | (112,737 | ) | ||||
Contributions to unconsolidated affiliates | (147 | ) | (4,422 | ) | ||||
Distributions received from unconsolidated affiliates in excess of cumulative earnings | 8,721 | 7,400 | ||||||
Proceeds from sale of assets | 241 | 296 | ||||||
Cash used in investing activities | (255,652 | ) | (109,463 | ) | ||||
Financing activities | ||||||||
Dividends paid | (316,408 | ) | (129,842 | ) | ||||
Distributions to noncontrolling interests | (1,500 | ) | (136,680 | ) | ||||
Borrowing (repayment) of short-term borrowings, net | (614,673 | ) | 180,452 | |||||
Repayment of long-term debt | (501,913 | ) | (1,951 | ) | ||||
Issuance of common stock | 1,182,117 | 3,722 | ||||||
Other, net | (7,011 | ) | (13,395 | ) | ||||
Cash used in financing activities | (259,388 | ) | (97,694 | ) | ||||
Change in cash and cash equivalents | (19,719 | ) | 61,933 | |||||
Cash and cash equivalents at beginning of period | 37,193 | 248,875 | ||||||
Cash and cash equivalents at end of period | $ | 17,474 | $ | 310,808 |
ONEOK, Inc. and Subsidiaries | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||||||||||
ONEOK Shareholders’ Equity | ||||||||||||||||||
(Unaudited) | Common Stock Issued | Preferred Stock Issued | Common Stock | Preferred Stock | Paid-in Capital | |||||||||||||
(Shares) | (Thousands of dollars) | |||||||||||||||||
January 1, 2018 | 423,166,234 | 20,000 | $ | 4,232 | $ | — | $ | 6,588,878 | ||||||||||
Cumulative effect adjustment for adoption of ASUs (Note A) | — | — | — | — | — | |||||||||||||
Net income | — | — | — | — | — | |||||||||||||
Other comprehensive income (loss) (Note F) | — | — | — | — | — | |||||||||||||
Common stock issued | 21,850,000 | — | 218 | — | 1,169,247 | |||||||||||||
Common stock dividends - $0.77 per share (Note E) | — | — | — | — | (11,960 | ) | ||||||||||||
Preferred stock dividends (Note E) | — | — | — | — | (275 | ) | ||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | |||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | |||||||||||||
Other | — | — | — | — | (10,717 | ) | ||||||||||||
March 31, 2018 | 445,016,234 | 20,000 | $ | 4,450 | $ | — | $ | 7,735,173 |
ONEOK Shareholders’ Equity | ||||||||||||||||||
(Unaudited) | Common Stock Issued | Preferred Stock Issued | Common Stock | Preferred Stock | Paid-in Capital | |||||||||||||
(Shares) | (Thousands of dollars) | |||||||||||||||||
January 1, 2017 | 245,811,180 | — | $ | 2,458 | $ | — | $ | 1,234,314 | ||||||||||
Cumulative effect adjustment for adoption of ASU 2016-09 | — | — | — | — | — | |||||||||||||
Net income | — | — | — | — | — | |||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | |||||||||||||
Common stock issued | — | — | — | — | (2,506 | ) | ||||||||||||
Common stock dividends - $0.615 per share | — | — | — | — | — | |||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | |||||||||||||
Other | — | — | — | — | 261 | |||||||||||||
March 31, 2017 | 245,811,180 | — | $ | 2,458 | $ | — | $ | 1,232,069 |
ONEOK, Inc. and Subsidiaries | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||||||||||||
(Continued) | ||||||||||||||||||||
ONEOK Shareholders’ Equity | ||||||||||||||||||||
(Unaudited) | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Noncontrolling Interests in Consolidated Subsidiaries | Total Equity | |||||||||||||||
(Thousands of dollars) | ||||||||||||||||||||
January 1, 2018 | $ | (188,530 | ) | $ | — | $ | (876,713 | ) | $ | 157,485 | $ | 5,685,352 | ||||||||
Cumulative effect adjustment for adoption of ASUs (Note A) | (38,101 | ) | 39,803 | — | 17 | 1,719 | ||||||||||||||
Net income | — | 264,508 | — | 1,541 | 266,049 | |||||||||||||||
Other comprehensive income (loss) (Note F) | 51,939 | — | — | — | 51,939 | |||||||||||||||
Common stock issued | — | — | 13,228 | — | 1,182,693 | |||||||||||||||
Common stock dividends - $0.77 per share (Note E) | — | (304,311 | ) | — | — | (316,271 | ) | |||||||||||||
Preferred stock dividends (Note E) | — | — | — | — | (275 | ) | ||||||||||||||
Distributions to noncontrolling interests | — | — | — | (1,500 | ) | (1,500 | ) | |||||||||||||
Contributions from noncontrolling interests | — | — | — | 10,263 | 10,263 | |||||||||||||||
Other | — | — | — | — | (10,717 | ) | ||||||||||||||
March 31, 2018 | $ | (174,692 | ) | $ | — | $ | (863,485 | ) | $ | 167,806 | $ | 6,869,252 |
ONEOK Shareholders’ Equity | ||||||||||||||||||||
(Unaudited) | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Noncontrolling Interests in Consolidated Subsidiaries | Total Equity | |||||||||||||||
(Thousands of dollars) | ||||||||||||||||||||
January 1, 2017 | $ | (154,350 | ) | $ | — | $ | (893,677 | ) | $ | 3,240,170 | $ | 3,428,915 | ||||||||
Cumulative effect adjustment for adoption of ASU 2016-09 | — | 73,368 | — | — | 73,368 | |||||||||||||||
Net income | — | 87,361 | — | 98,824 | 186,185 | |||||||||||||||
Other comprehensive income (loss) | 15,288 | — | — | 28,817 | 44,105 | |||||||||||||||
Common stock issued | — | — | 5,707 | — | 3,201 | |||||||||||||||
Common stock dividends - $0.615 per share | — | (129,842 | ) | — | — | (129,842 | ) | |||||||||||||
Distributions to noncontrolling interests | — | — | — | (136,680 | ) | (136,680 | ) | |||||||||||||
Other | — | — | — | — | 261 | |||||||||||||||
March 31, 2017 | $ | (139,062 | ) | $ | 30,887 | $ | (887,970 | ) | $ | 3,231,131 | $ | 3,469,513 |
A. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Standard | Description | Date of Adoption | Effect on the Financial Statements or Other Significant Matters | |||
Standards that were adopted | ||||||
ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” | The standard outlines the principles an entity must apply to measure and recognize revenue for entities that enter into contracts to provide goods or services to their customers. The core principle is that an entity should recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer. The amendment also requires more extensive disaggregated revenue disclosures in interim and annual financial statements. | First quarter 2018 | We adopted this standard on January 1, 2018, using the modified retrospective method. We recognized the cumulative effect of adopting the new revenue standard as an increase to beginning retained earnings of $1.7 million. Results for reporting periods beginning after January 1, 2018, are presented under the new standard, while prior periods are not adjusted and continue to be reported under the accounting standards in effect for those periods. The adoption of Topic 606 was not material to our net income; however, a significant portion of amounts historically presented as services revenues are now presented as a reduction to cost of sales and fuel. See Note K for discussion of these changes and additional disclosures. |
Standard | Description | Date of Adoption | Effect on the Financial Statements or Other Significant Matters | |||
Standards that were adopted (continued) | ||||||
ASU 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” | The standard requires all equity investments, other than those accounted for using the equity method of accounting or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income, eliminates the available-for-sale classification for equity securities with readily determinable fair values and eliminates the cost method for equity investments without readily determinable fair values. | First quarter 2018 | We do not have any equity investments classified as available-for-sale or accounted for using the cost method, therefore, the impact of adopting of this standard was not material. | |||
ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” | The standard clarifies the classification of certain cash receipts and cash payments on the statement of cash flows where diversity in practice has been identified. | First quarter 2018 | The impact of adopting this standard was not material. | |||
ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” | The standard requires the service cost component of net benefit cost to be reported in the same line item or items as other compensation costs from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. | First quarter 2018 | We adopted this standard on January 1, 2018, and utilized the practical expedient to estimate the impact on the prior comparative period information presented. Immaterial reclassifications have been made to prior comparative period information to reflect the current period presentation. Prior to adoption, we expensed all components of the net periodic benefit costs for our pension and postretirement benefit plans in operations and maintenance expense. We now record only the service component of the net periodic benefit costs in operations and maintenance expense, with the remainder being recorded in other expense. There was no change to net income from the adoption of this standard. | |||
ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities | The standard more closely aligns hedge accounting with companies’ existing risk-management strategies by expanding the strategies eligible for hedge accounting, relaxing the timing requirements of hedge documentation and effectiveness assessments, permitting in certain cases, the use of qualitative assessments on an ongoing basis to assess hedge effectiveness, and requiring new disclosures and presentation. | First quarter 2018 | We adopted this standard in the first quarter 2018 and recorded an immaterial cumulative-effect adjustment to the opening balance of retained earnings and other comprehensive income to eliminate the separate measurement of hedge ineffectiveness. See Note C for changes to disclosures due to adopting this standard. | |||
ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” | This standard allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. | First quarter 2018 | We adopted this standard in the first quarter 2018 and recorded a $38.1 million adjustment to retained earnings and accumulated other comprehensive income to eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act. |
Standard | Description | Date of Adoption | Effect on the Financial Statements or Other Significant Matters | |||
Standards that are not yet adopted | ||||||
ASU 2016-02, “Leases (Topic 842)” | The standard requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. It also requires qualitative disclosures along with specific quantitative disclosures by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. | First quarter 2019 | We are evaluating our current leases and other contracts that may be considered leases under the new standard and the impact on our internal controls, accounting policies and financial statements and disclosures. Our evaluation process includes creating a database of our existing leases and identifying a central group to track and account for lease activity, which is ongoing. We are developing internal controls to ensure the completeness and accuracy of the data. Due to this ongoing work, we cannot yet determine the quantitative impact, but adoption of the standard will result in the recognition of right of use assets and lease liabilities not previously recorded that will be presented on our Consolidated Balance Sheet under Topic 842 and will require disclosure in our footnotes. We are also monitoring recent exposure drafts and clarifications issued by the FASB. |
B. | FAIR VALUE MEASUREMENTS |
• | Level 1 - fair value measurements are based on unadjusted quoted prices for identical securities in active markets, including NYMEX-settled prices. These balances are comprised predominantly of exchange-traded derivative contracts for natural gas and crude oil. |
• | Level 2 - fair value measurements are based on significant observable pricing inputs, such as NYMEX-settled prices for natural gas and crude oil, and financial models that utilize implied forward LIBOR yield curves for interest-rate swaps. |
• | Level 3 - fair value measurements are based on inputs that may include one or more unobservable inputs, including internally developed natural gas basis and NGL price curves that incorporate observable and unobservable market data |
March 31, 2018 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total - Gross | Netting (a) | Total - Net | ||||||||||||||||||
(Thousands of dollars) | |||||||||||||||||||||||
Derivative assets | |||||||||||||||||||||||
Commodity contracts | |||||||||||||||||||||||
Financial contracts | $ | 3,180 | $ | — | $ | 20,065 | $ | 23,245 | $ | (23,245 | ) | $ | — | ||||||||||
Physical contracts | — | — | 40 | 40 | — | 40 | |||||||||||||||||
Interest-rate contracts | — | 83,513 | — | 83,513 | — | 83,513 | |||||||||||||||||
Total derivative assets | $ | 3,180 | $ | 83,513 | $ | 20,105 | $ | 106,798 | $ | (23,245 | ) | $ | 83,553 | ||||||||||
Derivative liabilities | |||||||||||||||||||||||
Commodity contracts | |||||||||||||||||||||||
Financial contracts | $ | (8,121 | ) | $ | — | $ | (15,799 | ) | $ | (23,920 | ) | $ | 23,920 | $ | — | ||||||||
Physical contracts | — | — | (1,208 | ) | (1,208 | ) | — | (1,208 | ) | ||||||||||||||
Interest-rate contracts | — | (11,169 | ) | — | (11,169 | ) | — | (11,169 | ) | ||||||||||||||
Total derivative liabilities | $ | (8,121 | ) | $ | (11,169 | ) | $ | (17,007 | ) | $ | (36,297 | ) | $ | 23,920 | $ | (12,377 | ) |
December 31, 2017 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total - Gross | Netting (a) | Total - Net | ||||||||||||||||||
(Thousands of dollars) | |||||||||||||||||||||||
Derivative assets | |||||||||||||||||||||||
Commodity contracts | |||||||||||||||||||||||
Financial contracts | $ | 4,252 | $ | — | $ | 20,203 | $ | 24,455 | $ | (24,455 | ) | $ | — | ||||||||||
Interest rate contracts | — | 49,960 | — | 49,960 | — | 49,960 | |||||||||||||||||
Total derivative assets | $ | 4,252 | $ | 49,960 | $ | 20,203 | $ | 74,415 | $ | (24,455 | ) | $ | 49,960 | ||||||||||
Derivative liabilities | |||||||||||||||||||||||
Commodity contracts | |||||||||||||||||||||||
Financial contracts | $ | (5,708 | ) | $ | — | $ | (48,260 | ) | $ | (53,968 | ) | $ | 53,936 | $ | (32 | ) | |||||||
Physical contracts | — | — | (4,781 | ) | (4,781 | ) | — | (4,781 | ) | ||||||||||||||
Total derivative liabilities | $ | (5,708 | ) | $ | — | $ | (53,041 | ) | $ | (58,749 | ) | $ | 53,936 | $ | (4,813 | ) |
Three Months Ended | ||||||||
March 31, | ||||||||
Derivative Assets (Liabilities) | 2018 | 2017 | ||||||
(Thousands of dollars) | ||||||||
Net assets (liabilities) at beginning of period | $ | (32,838 | ) | $ | (23,319 | ) | ||
Total realized/unrealized gains (losses): | ||||||||
Included in earnings (a) | (85 | ) | 913 | |||||
Included in other comprehensive income (loss) | 36,021 | 21,634 | ||||||
Net assets (liabilities) at end of period | $ | 3,098 | $ | (772 | ) |
C. | RISK-MANAGEMENT AND HEDGING ACTIVITIES USING DERIVATIVES |
• | Futures contracts - Standardized contracts to purchase or sell natural gas and crude oil for future delivery or settlement under the provisions of exchange regulations; |
• | Forward contracts - Nonstandardized commitments between two parties to purchase or sell natural gas, crude oil or NGLs for future physical delivery. These contracts are typically nontransferable and can only be canceled with the consent of both parties; |
• | Swaps - Exchange of one or more payments based on the value of one or more commodities. These instruments transfer the financial risk associated with a future change in value between the counterparties of the transaction, without also conveying ownership interest in the asset or liability; and |
• | Options - Contractual agreements that give the holder the right, but not the obligation, to buy or sell a fixed quantity of a commodity at a fixed price within a specified period of time. Options may either be standardized and exchange-traded or customized and nonexchange-traded. |
March 31, 2018 | December 31, 2017 | ||||||||||||||||
Location in our Consolidated Balance Sheets | Assets | (Liabilities) | Assets | (Liabilities) | |||||||||||||
(Thousands of dollars) | |||||||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||
Commodity contracts | |||||||||||||||||
Financial contracts | Other current assets/other current liabilities | $ | 16,719 | $ | (19,764 | ) | $ | 16,978 | $ | (42,819 | ) | ||||||
Other assets/other deferred credits | 3,061 | (747 | ) | — | (3,838 | ) | |||||||||||
Physical contracts | Other current assets/other current liabilities | 40 | (1,208 | ) | — | (4,781 | ) | ||||||||||
Interest-rate contracts | Other current assets | 59,502 | — | 1,330 | — | ||||||||||||
Other assets/other deferred credits | 24,011 | (11,169 | ) | 48,630 | — | ||||||||||||
Total derivatives designated as hedging instruments | 103,333 | (32,888 | ) | 66,938 | (51,438 | ) | |||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||
Commodity contracts | |||||||||||||||||
Financial contracts | Other current assets/other current liabilities | 3,465 | (3,409 | ) | 7,477 | (7,311 | ) | ||||||||||
Total derivatives not designated as hedging instruments | 3,465 | (3,409 | ) | 7,477 | (7,311 | ) | |||||||||||
Total derivatives | $ | 106,798 | $ | (36,297 | ) | $ | 74,415 | $ | (58,749 | ) |
March 31, 2018 | December 31, 2017 | |||||||||||||||
Contract Type | Purchased/ Payor | Sold/ Receiver | Purchased/ Payor | Sold/ Receiver | ||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||
Cash flow hedges | ||||||||||||||||
Fixed price | ||||||||||||||||
- Natural gas (Bcf) | Futures and swaps | — | (18.5 | ) | — | (24.5 | ) | |||||||||
- Crude oil and NGLs (MMBbl) | Futures, forwards and swaps | 3.5 | (10.7 | ) | 3.5 | (11.1 | ) | |||||||||
Basis | ||||||||||||||||
- Natural gas (Bcf) | Futures and swaps | — | (18.5 | ) | — | (24.5 | ) | |||||||||
Interest-rate contracts (Millions of dollars) | Swaps | $ | 2,000.0 | $ | — | $ | 1,750.0 | $ | — | |||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||
Fixed price | ||||||||||||||||
- NGLs (MMBbl) | Futures, forwards and swaps | 0.5 | (0.5 | ) | 0.8 | (0.8 | ) |
Three Months Ended | ||||||||
Derivatives in Cash Flow Hedging Relationships | March 31, | |||||||
2018 | 2017 | |||||||
(Thousands of dollars) | ||||||||
Commodity contracts | $ | 20,925 | $ | 27,328 | ||||
Interest-rate contracts | 23,911 | 1,529 | ||||||
Total unrealized gain (loss) recognized in other comprehensive income (loss) on derivatives | $ | 44,836 | $ | 28,857 |
Derivatives in Cash Flow Hedging Relationships | Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income | Three Months Ended | |||||||
March 31, | |||||||||
2018 | 2017 | ||||||||
(Thousands of dollars) | |||||||||
Commodity contracts | Commodity sales revenues | $ | (11,611 | ) | $ | (15,319 | ) | ||
Interest-rate contracts | Interest expense | (3,943 | ) | (5,329 | ) | ||||
Total gain (loss) reclassified from accumulated other comprehensive loss into net income on derivatives | $ | (15,554 | ) | $ | (20,648 | ) |
D. | DEBT |
March 31, 2018 | December 31, 2017 | |||||||
(Thousands of dollars) | ||||||||
ONEOK | ||||||||
Commercial paper outstanding, bearing a weighted-average interest rate of 2.23% as of December 31, 2017 | $ | — | $ | 614,673 | ||||
Senior unsecured obligations: | ||||||||
$700,000 at 4.25% due February 2022 | 547,397 | 547,397 | ||||||
$500,000 at 7.5% due September 2023 | 500,000 | 500,000 | ||||||
$500,000 at 4.0% due July 2027 | 500,000 | 500,000 | ||||||
$100,000 at 6.875% due September 2028 | 100,000 | 100,000 | ||||||
$400,000 at 6.0% due June 2035 | 400,000 | 400,000 | ||||||
$700,000 at 4.95% due July 2047 | 700,000 | 700,000 | ||||||
ONEOK Partners | ||||||||
Senior unsecured obligations: | ||||||||
$425,000 at 3.2% due September 2018 | 425,000 | 425,000 | ||||||
$1,000,000 term loan, rate of 2.87% as of December 31, 2017, due January 2019 | — | 500,000 | ||||||
$500,000 at 8.625% due March 2019 | 500,000 | 500,000 | ||||||
$300,000 at 3.8% due March 2020 | 300,000 | 300,000 | ||||||
$900,000 at 3.375 % due October 2022 | 900,000 | 900,000 | ||||||
$425,000 at 5.0 % due September 2023 | 425,000 | 425,000 | ||||||
$500,000 at 4.9 % due March 2025 | 500,000 | 500,000 | ||||||
$600,000 at 6.65% due October 2036 | 600,000 | 600,000 | ||||||
$600,000 at 6.85% due October 2037 | 600,000 | 600,000 | ||||||
$650,000 at 6.125% due February 2041 | 650,000 | 650,000 | ||||||
$400,000 at 6.2% due September 2043 | 400,000 | 400,000 | ||||||
Guardian Pipeline | ||||||||
Weighted average 7.85% due December 2022 | 34,695 | 36,607 | ||||||
Total debt | 8,082,092 | 9,198,677 | ||||||
Unamortized portion of terminated swaps | 18,038 | 18,468 | ||||||
Unamortized debt issuance costs and discounts | (75,729 | ) | (78,193 | ) | ||||
Current maturities of long-term debt | (932,650 | ) | (432,650 | ) | ||||
Short-term borrowings (a) | — | (614,673 | ) | |||||
Long-term debt | $ | 7,091,751 | $ | 8,091,629 |
E. | EQUITY |
Three Months Ended | ||||
March 31, | ||||
2017 | ||||
(Thousands, except per unit amounts) | ||||
Distribution per unit | $ | 0.79 | ||
General partner distributions | $ | 6,660 | ||
Incentive distributions | 100,538 | |||
Distributions to general partner | 107,198 | |||
Limited partner distributions to ONEOK | 90,323 | |||
Limited partner distributions to other unitholders | 135,480 | |||
Total distributions paid | $ | 333,001 |
F. | ACCUMULATED OTHER COMPREHENSIVE LOSS |
Unrealized Gains (Losses) on Risk- Management Assets/Liabilities (a) | Pension and Postretirement Benefit Plan Obligations (a) (b) | Unrealized Gains (Losses) on Risk- Management Assets/Liabilities of Unconsolidated Affiliates (a) | Accumulated Other Comprehensive Loss (a) | |||||||||||||
(Thousands of dollars) | ||||||||||||||||
January 1, 2018 | $ | (81,915 | ) | $ | (105,411 | ) | $ | (1,204 | ) | $ | (188,530 | ) | ||||
Other comprehensive income (loss) before reclassifications | 34,524 | (601 | ) | 2,860 | 36,783 | |||||||||||
Amounts reclassified from accumulated other comprehensive loss | 11,976 | 3,216 | (36 | ) | 15,156 | |||||||||||
Net current-period other comprehensive income (loss) attributable to ONEOK | 46,500 | 2,615 | 2,824 | 51,939 | ||||||||||||
Impact of adoption of ASU 2018-02 (c) | (17,935 | ) | (20,166 | ) | — | (38,101 | ) | |||||||||
March 31, 2018 | $ | (53,350 | ) | $ | (122,962 | ) | $ | 1,620 | $ | (174,692 | ) |
Details about Accumulated Other Comprehensive Loss Components | Three Months Ended | Affected Line Item in the Consolidated Statements of Income | ||||||||
March 31, | ||||||||||
2018 | 2017 | |||||||||
(Thousands of dollars) | ||||||||||
Unrealized gains (losses) on risk-management assets/liabilities | ||||||||||
Commodity contracts | $ | (11,611 | ) | $ | (15,319 | ) | Commodity sales revenues | |||
Interest-rate contracts | (3,943 | ) | (5,329 | ) | Interest expense | |||||
(15,554 | ) | (20,648 | ) | Income before income taxes | ||||||
3,578 | 3,365 | Income tax expense | ||||||||
(11,976 | ) | (17,283 | ) | Net income | ||||||
Noncontrolling interests | — | (11,625 | ) | Less: Net income attributable to noncontrolling interests | ||||||
$ | (11,976 | ) | $ | (5,658 | ) | Net income attributable to ONEOK | ||||
Pension and postretirement benefit plan obligations (a) | ||||||||||
Amortization of net loss | $ | (4,592 | ) | $ | (3,812 | ) | Other income (expense) | |||
Amortization of unrecognized prior service credit | 415 | 415 | Other income (expense) | |||||||
(4,177 | ) | (3,397 | ) | Income before income taxes | ||||||
961 | 1,359 | Income tax expense | ||||||||
$ | (3,216 | ) | $ | (2,038 | ) | Net income attributable to ONEOK | ||||
Unrealized gains (losses) on risk-management assets/liabilities of unconsolidated affiliates | ||||||||||
$ | 47 | $ | (96 | ) | Equity in net earnings from investments | |||||
(11 | ) | 15 | Income tax expense | |||||||
36 | (81 | ) | Net income | |||||||
Noncontrolling interests | — | (56 | ) | Less: Net income attributable to noncontrolling interests | ||||||
$ | 36 | $ | (25 | ) | Net income attributable to ONEOK | |||||
Total reclassifications for the period attributable to ONEOK | $ | (15,156 | ) | $ | (7,721 | ) | Net income attributable to ONEOK |
G. | EARNINGS PER SHARE |
Three Months Ended March 31, 2018 | ||||||||||
Income | Shares | Per Share Amount | ||||||||
(Thousands, except per share amounts) | ||||||||||
Basic EPS | ||||||||||
Net income attributable to ONEOK available for common stock | $ | 264,233 | 409,676 | $ | 0.65 | |||||
Diluted EPS | ||||||||||
Effect of dilutive securities | — | 2,497 | ||||||||
Net income attributable to ONEOK available for common stock and common stock equivalents | $ | 264,233 | 412,173 | $ | 0.64 |
Three Months Ended March 31, 2017 | ||||||||||
Income | Shares | Per Share Amount | ||||||||
(Thousands, except per share amounts) | ||||||||||
Basic EPS | ||||||||||
Net income attributable to ONEOK available for common stock | $ | 87,361 | 211,619 | $ | 0.41 | |||||
Diluted EPS | ||||||||||
Effect of dilutive securities | — | 1,983 | ||||||||
Net income attributable to ONEOK available for common stock and common stock equivalents | $ | 87,361 | 213,602 | $ | 0.41 |
H. | EMPLOYEE BENEFIT PLANS |
Pension Benefits | Postretirement Benefits | ||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Thousands of dollars) | |||||||||||||||
Components of net periodic benefit cost | |||||||||||||||
Service cost | $ | 1,832 | $ | 1,722 | $ | 211 | $ | 165 | |||||||
Interest cost | 4,408 | 4,655 | 527 | 565 | |||||||||||
Expected return on plan assets | (5,969 | ) | (5,336 | ) | (672 | ) | (564 | ) | |||||||
Amortization of prior service credit | — | — | (415 | ) | (415 | ) | |||||||||
Amortization of net loss | 4,258 | 3,392 | 334 | 420 | |||||||||||
Net periodic benefit cost (income) | $ | 4,529 | $ | 4,433 | $ | (15 | ) | $ | 171 |
I. | UNCONSOLIDATED AFFILIATES |
Three Months Ended | ||||||||
March 31, | ||||||||
2018 | 2017 | |||||||
(Thousands of dollars) | ||||||||
Northern Border Pipeline | $ | 17,137 | $ | 18,817 | ||||
Overland Pass Pipeline Company | 16,387 | 13,566 | ||||||
Roadrunner Gas Transmission | 4,958 | 4,405 | ||||||
Other | 1,705 | 2,776 | ||||||
Equity in net earnings from investments | $ | 40,187 | $ | 39,564 |
Three Months Ended | ||||||||
March 31, | ||||||||
2018 | 2017 | |||||||
(Thousands of dollars) | ||||||||
Income Statement | ||||||||
Operating revenues | $ | 158,908 | $ | 154,280 | ||||
Operating expenses | $ | 68,401 | $ | 66,936 | ||||
Net income | $ | 84,480 | $ | 81,131 | ||||
Distributions paid to us | $ | 49,816 | $ | 46,920 |
J. | COMMITMENTS AND CONTINGENCIES |
K. | REVENUES |
Three Months Ended March 31, 2018 | ||||||||||||
Income Statement | As Reported | Balance Without Adoption of Topic 606 | Effect of Change Increase/(Decrease) | |||||||||
Services revenue | $ | 282,073 | $ | 634,315 | $ | (352,242 | ) | |||||
Cost of sales and fuel (exclusive of depreciation and operating costs) | $ | 2,368,026 | $ | 2,725,774 | $ | (357,748 | ) | |||||
Depreciation and amortization | $ | 104,237 | $ | 104,092 | $ | 145 | ||||||
Income taxes | $ | 75,771 | $ | 74,539 | $ | 1,232 | ||||||
Net income | $ | 266,049 | $ | 261,920 | $ | 4,129 | ||||||
Net income attributable to noncontrolling interests | $ | 1,541 | $ | 1,539 | $ | 2 | ||||||
Net income attributable to ONEOK | $ | 264,508 | $ | 260,381 | $ | 4,127 |
March 31, 2018 | ||||||||||||
Balance Sheet | As Reported | Balance Without Adoption of Topic 606 | Effect of Change Increase/(Decrease) | |||||||||
Natural gas and natural gas liquids in storage | $ | 185,298 | $ | 186,998 | $ | (1,700 | ) | |||||
Other current assets | $ | 106,067 | $ | 105,097 | $ | 970 | ||||||
Property, plant and equipment | $ | 15,838,443 | $ | 15,816,674 | $ | 21,769 | ||||||
Accumulated depreciation and amortization | $ | 2,960,254 | $ | 2,958,737 | $ | 1,517 | ||||||
Deferred income taxes | $ | 116,120 | $ | 117,854 | $ | (1,734 | ) | |||||
Other assets | $ | 159,428 | $ | 154,167 | $ | 5,261 | ||||||
Other current liabilities | $ | 122,922 | $ | 120,877 | $ | 2,045 | ||||||
Other deferred credits | $ | 366,701 | $ | 351,525 | $ | 15,176 | ||||||
Retained earnings/paid-in capital | $ | 7,735,173 | $ | 7,729,364 | $ | 5,809 | ||||||
Noncontrolling interests in consolidated subsidiaries | $ | 167,806 | $ | 167,787 | $ | 19 |
Contract Liability | (Millions of dollars) | |||
Balance at January 1, 2018 (a) | $ | 33.3 | ||
Revenue recognized included in beginning balance | (17.3 | ) | ||
Net additions | 5.2 | |||
Balance at March 31, 2018 (b) | $ | 21.2 |
Expected Period of Recognition in Revenue | (Millions of dollars) | |||
Remainder of 2018 | $ | 242.9 | ||
2019 | 247.3 | |||
2020 | 215.4 | |||
2021 | 209.7 | |||
2022 and beyond | 1,032.6 | |||
Total estimated transaction price allocated to unsatisfied performance obligations | $ | 1,947.9 |
L. | SEGMENTS |
• | our Natural Gas Gathering and Processing segment gathers, treats and processes natural gas; |
• | our Natural Gas Liquids segment gathers, treats, fractionates and transports NGLs and stores, markets and distributes NGL products; and |
• | our Natural Gas Pipelines segment operates regulated interstate and intrastate natural gas transmission pipelines and natural gas storage facilities. |
Three Months Ended March 31, 2018 | Natural Gas Gathering and Processing | Natural Gas Liquids (a) | Natural Gas Pipelines (b) | Total | |||||||||||
(Thousands of dollars) | |||||||||||||||
NGL and condensate sales | $ | 413,157 | $ | 2,552,770 | $ | — | $ | 2,965,927 | |||||||
Residue natural gas sales | 254,997 | — | 4,919 | 259,916 | |||||||||||
Gathering, processing and exchange services revenue | 38,429 | 83,258 | — | 121,687 | |||||||||||
Transportation and storage revenue | — | 53,478 | 98,338 | 151,816 | |||||||||||
Other | 1,408 | 2,963 | 6,654 | 11,025 | |||||||||||
Total revenues (c) | 707,991 | 2,692,469 | 109,911 | 3,510,371 | |||||||||||
Cost of sales and fuel (exclusive of depreciation and operating costs) | (492,622 | ) | (2,281,072 | ) | (5,454 | ) | (2,779,148 | ) | |||||||
Operating costs | (88,359 | ) | (88,592 | ) | (33,190 | ) | (210,141 | ) | |||||||
Equity in net earnings from investments | 1,668 | 16,424 | 22,095 | 40,187 | |||||||||||
Other | 1,873 | 2,850 | 263 | 4,986 | |||||||||||
Segment adjusted EBITDA | $ | 130,551 | $ | 342,079 | $ | 93,625 | $ | 566,255 | |||||||
Depreciation and amortization | $ | (47,748 | ) | $ | (42,427 | ) | $ | (13,269 | ) | $ | (103,444 | ) | |||
Total assets | $ | 5,462,305 | $ | 8,370,364 | $ | 2,060,700 | $ | 15,893,369 | |||||||
Capital expenditures | $ | 111,729 | $ | 124,921 | $ | 19,898 | $ | 256,548 |
Three Months Ended March 31, 2018 | Total Segments | Other and Eliminations | Total | |||||||||
(Thousands of dollars) | ||||||||||||
Reconciliations of total segments to consolidated | ||||||||||||
NGL and condensate sales | $ | 2,965,927 | $ | (408,910 | ) | $ | 2,557,017 | |||||
Residue natural gas sales | 259,916 | 2,250 | 262,166 | |||||||||
Gathering, processing and exchange services revenue | 121,687 | (21 | ) | 121,666 | ||||||||
Transportation and storage revenue | 151,816 | (2,094 | ) | 149,722 | ||||||||
Other | 11,025 | 481 | 11,506 | |||||||||
Total revenues (a) | $ | 3,510,371 | $ | (408,294 | ) | $ | 3,102,077 | |||||
Cost of sales and fuel (exclusive of depreciation and operating costs) | $ | (2,779,148 | ) | $ | 411,122 | $ | (2,368,026 | ) | ||||
Operating costs | $ | (210,141 | ) | $ | (63 | ) | $ | (210,204 | ) | |||
Depreciation and amortization | $ | (103,444 | ) | $ | (793 | ) | $ | (104,237 | ) | |||
Equity in net earnings from investments | $ | 40,187 | $ | — | $ | 40,187 | ||||||
Total assets | $ | 15,893,369 | $ | 538,978 | $ | 16,432,347 | ||||||
Capital expenditures | $ | 256,548 | $ | 7,919 | $ | 264,467 |
Three Months Ended March 31, 2017 | Natural Gas Gathering and Processing | Natural Gas Liquids (a) | Natural Gas Pipelines (b) | Total | |||||||||||
(Thousands of dollars) | |||||||||||||||
Sales to unaffiliated customers | $ | 400,149 | $ | 2,244,000 | $ | 104,924 | $ | 2,749,073 | |||||||
Intersegment revenues | 261,127 | 147,984 | 1,894 | 411,005 | |||||||||||
Total revenues | 661,276 | 2,391,984 | 106,818 | 3,160,078 | |||||||||||
Cost of sales and fuel (exclusive of depreciation and operating costs) | (488,384 | ) | (2,048,693 | ) | (16,603 | ) | (2,553,680 | ) | |||||||
Operating costs | (71,328 | ) | (78,440 | ) | (31,563 | ) | (181,331 | ) | |||||||
Equity in net earnings from investments | 2,630 | 13,722 | 23,212 | 39,564 | |||||||||||
Other | (227 | ) | (344 | ) | 1,094 | 523 | |||||||||
Segment adjusted EBITDA | $ | 103,967 | $ | 278,229 | $ | 82,958 | $ | 465,154 | |||||||
Depreciation and amortization | $ | (44,968 | ) | $ | (41,115 | ) | $ | (12,543 | ) | $ | (98,626 | ) | |||
Total assets | $ | 5,296,359 | $ | 8,194,835 | $ | 1,945,407 | $ | 15,436,601 | |||||||
Capital expenditures | $ | 63,151 | $ | 20,453 | $ | 25,014 | $ | 108,618 |
Three Months Ended March 31, 2017 | Total Segments | Other and Eliminations | Total | |||||||||
(Thousands of dollars) | ||||||||||||
Reconciliations of total segments to consolidated | ||||||||||||
Sales to unaffiliated customers | $ | 2,749,073 | $ | 538 | $ | 2,749,611 | ||||||
Intersegment revenues | 411,005 | (411,005 | ) | — | ||||||||
Total revenues | $ | 3,160,078 | $ | (410,467 | ) | $ | 2,749,611 | |||||
Cost of sales and fuel (exclusive of depreciation and operating costs) | $ | (2,553,680 | ) | $ | 409,837 | $ | (2,143,843 | ) | ||||
Operating costs | $ | (181,331 | ) | $ | (7,874 | ) | $ | (189,205 | ) | |||
Depreciation and amortization | $ | (98,626 | ) | $ | (793 | ) | $ | (99,419 | ) | |||
Equity in net earnings from investments | $ | 39,564 | $ | — | $ | 39,564 | ||||||
Total assets | $ | 15,436,601 | $ | 630,957 | $ | 16,067,558 | ||||||
Capital expenditures | $ | 108,618 | $ | 4,119 | $ | 112,737 |
Three Months Ended | ||||||||
March 31, | ||||||||
2018 | 2017 | |||||||
Reconciliation of net income to total segment adjusted EBITDA | (Thousands of dollars) | |||||||
Net income | $ | 266,049 | $ | 186,185 | ||||
Add: | ||||||||
Interest expense, net of capitalized interest | 115,725 | 116,462 | ||||||
Depreciation and amortization | 104,237 | 99,419 | ||||||
Income taxes | 75,771 | 54,941 | ||||||
Noncash compensation expense | 9,226 | 1,647 | ||||||
Other corporate costs and noncash items | (4,753 | ) | 6,500 | |||||
Total segment adjusted EBITDA | $ | 566,255 | $ | 465,154 |
M. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION |
• | we are referred to as “Parent Issuer and Guarantor”; |
• | ONEOK Partners is referred to as “Subsidiary Issuer and Guarantor”; |
• | the Intermediate Partnership is referred to as “Guarantor Subsidiary”; and |
• | the “Non-Guarantor Subsidiaries” are all subsidiaries other than the Guarantor Subsidiary and Subsidiary Issuer and Guarantor. |
Three Months Ended March 31, 2018 | |||||||||||||||||||||||
(Unaudited) | Parent Issuer & Guarantor | Subsidiary Issuer & Guarantor | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Consolidating Entries | Total | |||||||||||||||||
(Millions of dollars) | |||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Commodity sales | $ | — | $ | — | $ | — | $ | 2,820.0 | $ | — | $ | 2,820.0 | |||||||||||
Services | — | — | — | 282.6 | (0.5 | ) | 282.1 | ||||||||||||||||
Total revenues | — | — | — | 3,102.6 | (0.5 | ) | 3,102.1 | ||||||||||||||||
Cost of sales and fuel (exclusive of items shown separately below) | — | — | — | 2,368.0 | — | 2,368.0 | |||||||||||||||||
Operating expenses | (0.7 | ) | — | — | 315.7 | (0.5 | ) | 314.5 | |||||||||||||||
Gain on sale of assets | — | — | — | (0.1 | ) | — | (0.1 | ) | |||||||||||||||
Operating income | 0.7 | — | — | 419.0 | — | 419.7 | |||||||||||||||||
Equity in net earnings from investments | 368.5 | 370.9 | 370.9 | 28.6 | (1,098.7 | ) | 40.2 | ||||||||||||||||
Other income (expense), net | 7.2 | 77.1 | 77.1 | (9.6 | ) | (154.2 | ) | (2.4 | ) | ||||||||||||||
Interest expense, net | (39.8 | ) | (77.1 | ) | (77.1 | ) | (75.9 | ) | 154.2 | (115.7 | ) | ||||||||||||
Income before income taxes | 336.6 | 370.9 | 370.9 | 362.1 | (1,098.7 | ) | 341.8 | ||||||||||||||||
Income taxes | (72.1 | ) | — | — | (3.7 | ) | — | (75.8 | ) | ||||||||||||||
Net income | 264.5 | 370.9 | 370.9 | 358.4 | (1,098.7 | ) | 266.0 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | 1.5 | — | 1.5 | |||||||||||||||||
Net income attributable to ONEOK | 264.5 | 370.9 | 370.9 | 356.9 | (1,098.7 | ) | 264.5 | ||||||||||||||||
Less: Preferred stock dividends | 0.3 | — | — | — | — | 0.3 | |||||||||||||||||
Net income available to common shareholders | $ | 264.2 | $ | 370.9 | $ | 370.9 | $ | 356.9 | $ | (1,098.7 | ) | $ | 264.2 |
Three Months Ended March 31, 2017 | |||||||||||||||||||||||
(Unaudited) | Parent Issuer & Guarantor | Subsidiary Issuer & Guarantor | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Consolidating Entries | Total | |||||||||||||||||
(Millions of dollars) | |||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Commodity sales | $ | — | $ | — | $ | — | $ | 2,216.7 | $ | — | $ | 2,216.7 | |||||||||||
Services | — | — | — | 532.9 | — | 532.9 | |||||||||||||||||
Total revenues | — | — | — | 2,749.6 | — | 2,749.6 | |||||||||||||||||
Cost of sales and fuel (exclusive of items shown separately below) | — | — | — | 2,143.8 | — | 2,143.8 | |||||||||||||||||
Operating expenses | 6.9 | — | — | 281.8 | — | 288.7 | |||||||||||||||||
Operating income | (6.9 | ) | — | — | 324.0 | — | 317.1 | ||||||||||||||||
Equity in net earnings from investments | 268.7 | 269.1 | 269.1 | 20.7 | (788.0 | ) | 39.6 | ||||||||||||||||
Other income (expense), net | 0.5 | 91.3 | 91.3 | 0.4 | (182.6 | ) | 0.9 | ||||||||||||||||
Interest expense, net | (25.8 | ) | (91.3 | ) | (91.3 | ) | (90.7 | ) | 182.6 | (116.5 | ) | ||||||||||||
Income before income taxes | 236.5 | 269.1 | 269.1 | 254.4 | (788.0 | ) | 241.1 | ||||||||||||||||
Income taxes | (51.2 | ) | — | — | (3.7 | ) | — | (54.9 | ) | ||||||||||||||
Net income | 185.3 | 269.1 | 269.1 | 250.7 | (788.0 | ) | 186.2 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | 97.9 | — | — | 0.9 | — | 98.8 | |||||||||||||||||
Net income attributable to ONEOK | $ | 87.4 | $ | 269.1 | $ | 269.1 | $ | 249.8 | $ | (788.0 | ) | $ | 87.4 |
Three Months Ended March 31, 2018 | |||||||||||||||||||||||
(Unaudited) | Parent Issuer & Guarantor | Subsidiary Issuer & Guarantor | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Consolidating Entries | Total | |||||||||||||||||
(Millions of dollars) | |||||||||||||||||||||||
Net income | $ | 264.5 | $ | 370.9 | $ | 370.9 | $ | 358.4 | $ | (1,098.7 | ) | $ | 266.0 | ||||||||||
Other comprehensive income (loss), net of tax | |||||||||||||||||||||||
Unrealized gains (losses) on derivatives, net of tax | 18.4 | 20.9 | 20.9 | 16.1 | (41.8 | ) | 34.5 | ||||||||||||||||
Realized (gains) losses on derivatives in net income, net of tax | 0.9 | 14.3 | 11.6 | 8.3 | (23.1 | ) | 12.0 | ||||||||||||||||
Change in pension and postretirement benefit plan liability, net of tax | 3.2 | (0.6 | ) | — | — | — | 2.6 | ||||||||||||||||
Other comprehensive income (loss) on investments in unconsolidated affiliates, net of tax | — | 3.7 | 3.7 | 2.8 | (7.4 | ) | 2.8 | ||||||||||||||||
Total other comprehensive income (loss), net of tax | 22.5 | 38.3 | 36.2 | 27.2 | (72.3 | ) | 51.9 | ||||||||||||||||
Comprehensive income | 287.0 | 409.2 | 407.1 | 385.6 | (1,171.0 | ) | 317.9 | ||||||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | — | — | — | 1.5 | — | 1.5 | |||||||||||||||||
Comprehensive income attributable to ONEOK | $ | 287.0 | $ | 409.2 | $ | 407.1 | $ | 384.1 | $ | (1,171.0 | ) | $ | 316.4 |
Three Months Ended March 31, 2017 | |||||||||||||||||||||||
(Unaudited) | Parent Issuer & Guarantor | Subsidiary Issuer & Guarantor | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Consolidating Entries | Total | |||||||||||||||||
(Millions of dollars) | |||||||||||||||||||||||
Net income | $ | 185.3 | $ | 269.1 | $ | 269.1 | $ | 250.7 | $ | (788.0 | ) | $ | 186.2 | ||||||||||
Other comprehensive income (loss), net of tax | |||||||||||||||||||||||
Unrealized gains (losses) on derivatives, net of tax | — | 28.8 | 27.3 | 51.8 | (83.4 | ) | 24.5 | ||||||||||||||||
Realized (gains) losses on derivatives in net income, net of tax | 0.5 | 19.8 | 15.3 | 32.1 | (50.4 | ) | 17.3 | ||||||||||||||||
Change in pension and postretirement benefit plan liability, net of tax | 2.0 | — | — | — | — | 2.0 | |||||||||||||||||
Other comprehensive income (loss) on investments in unconsolidated affiliates, net of tax | — | 0.4 | 0.4 | 0.7 | (1.2 | ) | 0.3 | ||||||||||||||||
Total other comprehensive income (loss), net of tax | 2.5 | 49.0 | 43.0 | 84.6 | (135.0 | ) | 44.1 | ||||||||||||||||
Comprehensive income | 187.8 | 318.1 | 312.1 | 335.3 | (923.0 | ) | 230.3 | ||||||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | 126.8 | — | — | 0.9 | — | 127.7 | |||||||||||||||||
Comprehensive income attributable to ONEOK | $ | 61.0 | $ | 318.1 | $ | 312.1 | $ | 334.4 | $ | (923.0 | ) | $ | 102.6 |
March 31, 2018 | |||||||||||||||||||||||
(Unaudited) | Parent Issuer & Guarantor | Subsidiary Issuer & Guarantor | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Consolidating Entries | Total | |||||||||||||||||
Assets | (Millions of dollars) | ||||||||||||||||||||||
Current assets | |||||||||||||||||||||||
Cash and cash equivalents | $ | 17.5 | $ | — | $ | — | $ | — | $ | — | $ | 17.5 | |||||||||||
Accounts receivable, net | — | — | — | 844.2 | — | 844.2 | |||||||||||||||||
Natural gas and natural gas liquids in storage | — | — | — | 185.3 | — | 185.3 | |||||||||||||||||
Other current assets | 70.8 | — | — | 172.9 | — | 243.7 | |||||||||||||||||
Total current assets | 88.3 | — | — | 1,202.4 | — | 1,290.7 | |||||||||||||||||
Property, plant and equipment | |||||||||||||||||||||||
Property, plant and equipment | 134.1 | — | — | 15,704.3 | — | 15,838.4 | |||||||||||||||||
Accumulated depreciation and amortization | 87.7 | — | — | 2,872.5 | — | 2,960.2 | |||||||||||||||||
Net property, plant and equipment | 46.4 | — | — | 12,831.8 | — | 12,878.2 | |||||||||||||||||
Investments and other assets | |||||||||||||||||||||||
Investments | 5,823.6 | 3,207.8 | 8,443.5 | 802.9 | (17,280.4 | ) | 997.4 | ||||||||||||||||
Intercompany notes receivable | 3,450.2 | 8,118.3 | 2,882.6 | — | (14,451.1 | ) | — | ||||||||||||||||
Other assets | 305.4 | — | — | 1,008.0 | (47.4 | ) | 1,266.0 | ||||||||||||||||
Total investments and other assets | 9,579.2 | 11,326.1 | 11,326.1 | 1,810.9 | (31,778.9 | ) | 2,263.4 | ||||||||||||||||
Total assets | $ | 9,713.9 | $ | 11,326.1 | $ | 11,326.1 | $ | 15,845.1 | $ | (31,778.9 | ) | $ | 16,432.3 | ||||||||||
Liabilities and equity | |||||||||||||||||||||||
Current liabilities | |||||||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | 925.0 | $ | — | $ | 7.7 | $ | — | $ | 932.7 | |||||||||||
Accounts payable | 6.3 | — | — | 766.8 | — | 773.1 | |||||||||||||||||
Other current liabilities | 43.5 | 68.2 | — | 233.3 | — | 345.0 | |||||||||||||||||
Total current liabilities | 49.8 | 993.2 | — | 1,007.8 | — | 2,050.8 | |||||||||||||||||
Intercompany debt | — | — | 8,118.3 | 6,332.8 | (14,451.1 | ) | — | ||||||||||||||||
Long-term debt, excluding current maturities | 2,726.8 | 4,338.1 | — | 26.9 | — | 7,091.8 | |||||||||||||||||
Deferred credits and other liabilities | 235.8 | — | — | 232.0 | (47.4 | ) | 420.4 | ||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||||
Equity | |||||||||||||||||||||||
Equity excluding noncontrolling interests in consolidated subsidiaries | 6,701.5 | 5,994.8 | 3,207.8 | 8,077.8 | (17,280.4 | ) | 6,701.5 | ||||||||||||||||
Noncontrolling interests in consolidated subsidiaries | — | — | — | 167.8 | — | 167.8 | |||||||||||||||||
Total equity | 6,701.5 | 5,994.8 | 3,207.8 | 8,245.6 | (17,280.4 | ) | 6,869.3 | ||||||||||||||||
Total liabilities and equity | $ | 9,713.9 | $ | 11,326.1 | $ | 11,326.1 | $ | 15,845.1 | $ | (31,778.9 | ) | $ | 16,432.3 |
December 31, 2017 | ||||||||||||||||||||||||
(Unaudited) | Parent Issuer & Guarantor | Subsidiary Issuer & Guarantor | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Consolidating Entries | Total | ||||||||||||||||||
Assets | (Millions of dollars) | |||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 37.2 | $ | — | $ | — | $ | — | $ | — | $ | 37.2 | ||||||||||||
Accounts receivable, net | — | — | — | 1,203.0 | — | 1,203.0 | ||||||||||||||||||
Materials and supplies | — | — | — | 90.3 | — | 90.3 | ||||||||||||||||||
Natural gas and natural gas liquids in storage | — | — | — | 342.3 | — | 342.3 | ||||||||||||||||||
Other current assets | 9.8 | 1.3 | — | 80.6 | — | 91.7 | ||||||||||||||||||
Total current assets | 47.0 | 1.3 | — | 1,716.2 | — | — | 1,764.5 | |||||||||||||||||
Property, plant and equipment | ||||||||||||||||||||||||
Property, plant and equipment | 128.3 | — | — | 15,431.3 | — | 15,559.6 | ||||||||||||||||||
Accumulated depreciation and amortization | 86.4 | — | — | 2,775.1 | — | 2,861.5 | ||||||||||||||||||
Net property, plant and equipment | 41.9 | — | — | 12,656.2 | — | 12,698.1 | ||||||||||||||||||
Investments and other assets | ||||||||||||||||||||||||
Investments | 5,752.1 | 3,133.7 | 8,058.4 | 803.0 | (16,744.0 | ) | 1,003.2 | |||||||||||||||||
Intercompany notes receivable | 2,926.9 | 8,627.8 | 3,703.1 | — | (15,257.8 | ) | — | |||||||||||||||||
Other assets | 416.9 | 0.2 | — | 1,007.4 | (44.4 | ) | 1,380.1 | |||||||||||||||||
Total investments and other assets | 9,095.9 | 11,761.7 | 11,761.5 | 1,810.4 | (32,046.2 | ) | 2,383.3 | |||||||||||||||||
Total assets | $ | 9,184.8 | $ | 11,763.0 | $ | 11,761.5 | $ | 16,182.8 | $ | (32,046.2 | ) | $ | 16,845.9 | |||||||||||
Liabilities and equity | ||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | 425.0 | $ | — | $ | 7.7 | $ | — | $ | 432.7 | ||||||||||||
Short-term borrowings | 614.7 | — | — | — | — | 614.7 | ||||||||||||||||||
Accounts payable | 12.0 | — | — | 1,128.6 | — | 1,140.6 | ||||||||||||||||||
Other current liabilities | 65.9 | 85.0 | — | 328.4 | — | 479.3 | ||||||||||||||||||
Total current liabilities | 692.6 | 510.0 | — | 1,464.7 | — | 2,667.3 | ||||||||||||||||||
Intercompany debt | — | — | 8,627.8 | 6,630.0 | (15,257.8 | ) | — | |||||||||||||||||
Long-term debt, excluding current maturities | 2,726.4 | 5,336.4 | — | 28.8 | — | 8,091.6 | ||||||||||||||||||
Deferred credits and other liabilities | 237.9 | — | — | 208.1 | (44.4 | ) | 401.6 | |||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||
Equity excluding noncontrolling interests in consolidated subsidiaries | 5,527.9 | 5,916.6 | 3,133.7 | 7,693.7 | (16,744.0 | ) | 5,527.9 | |||||||||||||||||
Noncontrolling interests in consolidated subsidiaries | — | — | — | 157.5 | — | 157.5 | ||||||||||||||||||
Total equity | 5,527.9 | 5,916.6 | 3,133.7 | 7,851.2 | (16,744.0 | ) | 5,685.4 | |||||||||||||||||
Total liabilities and equity | $ | 9,184.8 | $ | 11,763.0 | $ | 11,761.5 | $ | 16,182.8 | $ | (32,046.2 | ) | $ | 16,845.9 |
Three Months Ended March 31, 2018 | ||||||||||||||||||||||||
(Unaudited) | Parent Issuer & Guarantor | Subsidiary Issuer & Guarantor | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Consolidating Entries | Total | ||||||||||||||||||
(Millions of dollars) | ||||||||||||||||||||||||
Operating activities | ||||||||||||||||||||||||
Cash provided by operating activities | $ | 266.8 | $ | 319.7 | $ | 17.1 | $ | 557.7 | $ | (666.0 | ) | $ | 495.3 | |||||||||||
Investing activities | ||||||||||||||||||||||||
Capital expenditures | (5.7 | ) | — | — | (258.8 | ) | — | (264.5 | ) | |||||||||||||||
Contributions to unconsolidated affiliates | — | — | — | (0.1 | ) | — | (0.1 | ) | ||||||||||||||||
Other investing activities | — | — | 5.0 | 4.0 | — | 9.0 | ||||||||||||||||||
Cash provided by (used in) investing activities | (5.7 | ) | — | 5.0 | (254.9 | ) | — | (255.6 | ) | |||||||||||||||
Financing activities | ||||||||||||||||||||||||
Dividends paid | (316.4 | ) | (333.0 | ) | (333.0 | ) | — | 666.0 | (316.4 | ) | ||||||||||||||
Distributions to noncontrolling interests | — | — | — | (1.5 | ) | — | (1.5 | ) | ||||||||||||||||
Intercompany borrowings (advances), net | (514.5 | ) | 513.3 | 310.9 | (309.7 | ) | — | — | ||||||||||||||||
Borrowing (repayment) of short-term borrowings, net | (614.7 | ) | — | — | — | — | (614.7 | ) | ||||||||||||||||
Repayment of long-term debt | — | (500.0 | ) | — | (1.9 | ) | — | (501.9 | ) | |||||||||||||||
Issuance of common stock | 1,182.1 | — | — | — | — | 1,182.1 | ||||||||||||||||||
Other, net | (17.3 | ) | — | — | 10.3 | — | (7.0 | ) | ||||||||||||||||
Cash used in financing activities | (280.8 | ) | (319.7 | ) | (22.1 | ) | — | (302.8 | ) | 666.0 | (259.4 | ) | ||||||||||||
Change in cash and cash equivalents | (19.7 | ) | — | — | — | — | (19.7 | ) | ||||||||||||||||
Cash and cash equivalents at beginning of period | 37.2 | — | — | — | — | 37.2 | ||||||||||||||||||
Cash and cash equivalents at end of period | $ | 17.5 | $ | — | $ | — | $ | — | $ | — | $ | 17.5 |
Three Months Ended March 31, 2017 | |||||||||||||||||||||||
(Unaudited) | Parent Issuer & Guarantor | Subsidiary Issuer & Guarantor | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Consolidating Entries | Total | |||||||||||||||||
(Millions of dollars) | |||||||||||||||||||||||
Operating activities | |||||||||||||||||||||||
Cash provided by operating activities | $ | 134.2 | $ | 322.1 | $ | 18.8 | $ | 324.5 | $ | (530.5 | ) | $ | 269.1 | ||||||||||
Investing activities | |||||||||||||||||||||||
Capital expenditures | (0.1 | ) | — | — | (112.6 | ) | — | (112.7 | ) | ||||||||||||||
Other investing activities | — | — | 2.9 | 0.3 | — | 3.2 | |||||||||||||||||
Cash provided by (used in) investing activities | (0.1 | ) | — | 2.9 | (112.3 | ) | — | (109.5 | ) | ||||||||||||||
Financing activities | |||||||||||||||||||||||
Dividends paid | (129.8 | ) | (333.0 | ) | (333.0 | ) | — | 666.0 | (129.8 | ) | |||||||||||||
Distributions to noncontrolling interests | — | — | — | (1.2 | ) | (135.5 | ) | (136.7 | ) | ||||||||||||||
Intercompany borrowings (advances), net | 52.1 | (162.4 | ) | 319.4 | (209.1 | ) | — | — | |||||||||||||||
Borrowing (repayment) of short-term borrowings, net | — | 180.5 | — | — | — | 180.5 | |||||||||||||||||
Repayment of long-term debt | (0.1 | ) | — | — | (1.9 | ) | — | (2.0 | ) | ||||||||||||||
Issuance of common stock | 3.7 | — | — | — | — | 3.7 | |||||||||||||||||
Other | (6.2 | ) | (7.2 | ) | — | — | — | (13.4 | ) | ||||||||||||||
Cash used in financing activities | (80.3 | ) | (322.1 | ) | (13.6 | ) | (212.2 | ) | 530.5 | (97.7 | ) | ||||||||||||
Change in cash and cash equivalents | 53.8 | — | 8.1 | — | — | 61.9 | |||||||||||||||||
Cash and cash equivalents at beginning of period | 248.5 | — | 0.4 | — | — | 248.9 | |||||||||||||||||
Cash and cash equivalents at end of period | $ | 302.3 | $ | — | $ | 8.5 | $ | — | $ | — | $ | 310.8 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Project | Scope | Approximate Costs (a) | Completion Date |
Natural Gas Gathering and Processing | (in millions) | ||
Additional STACK processing capacity | 200 MMcf/d processing capacity through long-term processing services agreement | $40 | December 2017 |
30-mile natural gas gathering pipeline | |||
Canadian Valley expansion | 200 MMcf/d processing plant expansion in the STACK area and related gathering infrastructure | 160 | Fourth Quarter 2018 |
Increases capacity to more than 400 MMcf/d | |||
20 MBbl/d additional NGL volume | |||
Supported by acreage dedications, long-term primarily fee-based contracts and minimum volume commitments | |||
Demicks Lake plant and related infrastructure | 200 MMcf/d processing plant and related infrastructure in the core of the Williston Basin | 400 | Fourth Quarter 2019 |
Supported by acreage dedications with long-term primarily fee-based contracts | |||
Total Natural Gas Gathering and Processing | $600 | ||
Natural Gas Liquids | |||
WTLPG pipeline expansion | 120-mile pipeline lateral extension with capacity of 110 MBbl/d in the Permian Basin | $160 (b) | Third Quarter 2018 |
Supported by long-term dedicated NGL production from two planned third-party natural gas processing plants | |||
Sterling III pipeline expansion and Arbuckle connection | 60 MBbl/d NGL pipeline expansion | 130 | Fourth Quarter 2018 |
Increases capacity to 250 MBbl/d | |||
Includes additional NGL gathering system expansions | |||
Supported by long-term third-party contract | |||
Elk Creek pipeline and related infrastructure | 900-mile NGL pipeline from the Williston Basin to the Mid-Continent region with initial capacity of 240 MBbl/d, and related infrastructure | 1,400 | Fourth Quarter 2019 |
Anchored by long-term contracts supported primarily by minimum volume commitments | |||
Expansion capability up to 400 MBbl/d with additional pump facilities | |||
Arbuckle II pipeline and related infrastructure | 530-mile NGL pipeline from the STACK area to Mont Belvieu, Texas, with initial capacity up to 400 MBbl/d, and related infrastructure | 1,360 | First Quarter 2020 |
Supported by long-term contracts | |||
Expansion capability up to 1,000 MBbl/d | |||
MB-4 fractionator and related infrastructure | 125 MBbl/d NGL fractionator in Mont Belvieu, Texas, and related infrastructure, which includes additional NGL storage in Mont Belvieu | 575 | First Quarter 2020 |
Fully contracted with long-term contracts | |||
Total Natural Gas Liquids | $3,625 | ||
Total | $4,225 |
Three Months Ended | Three Months | ||||||||||||||
March 31, | 2018 vs. 2017 | ||||||||||||||
Financial Results | 2018 | 2017 | Increase (Decrease) | ||||||||||||
(Millions of dollars) | |||||||||||||||
Revenues | |||||||||||||||
Commodity sales | $ | 2,820.0 | $ | 2,216.7 | $ | 603.3 | 27 | % | |||||||
Services | 282.1 | 532.9 | (250.8 | ) | (47 | %) | |||||||||
Total revenues | 3,102.1 | 2,749.6 | 352.5 | 13 | % | ||||||||||
Cost of sales and fuel (exclusive of items shown separately below) | 2,368.0 | 2,143.8 | 224.2 | 10 | % | ||||||||||
Operating costs | 210.3 | 189.3 | 21.0 | 11 | % | ||||||||||
Depreciation and amortization | 104.2 | 99.4 | 4.8 | 5 | % | ||||||||||
(Gain) loss on sale of assets | (0.1 | ) | — | 0.1 | * | ||||||||||
Operating income | $ | 419.7 | $ | 317.1 | $ | 102.6 | 32 | % | |||||||
Equity in net earnings from investments | $ | 40.2 | $ | 39.6 | $ | 0.6 | 2 | % | |||||||
Interest expense, net of capitalized interest | $ | (115.7 | ) | $ | (116.5 | ) | $ | (0.8 | ) | (1 | %) | ||||
Net income | $ | 266.0 | $ | 186.2 | $ | 79.8 | 43 | % | |||||||
Adjusted EBITDA | $ | 570.3 | $ | 459.6 | $ | 110.7 | 24 | % | |||||||
Capital expenditures | $ | 264.5 | $ | 112.7 | $ | 151.8 | * |
• | producers focusing their drilling and completion in the most productive areas with favorable economics where we have significant gathering and processing assets; and |
• | continued producer improvements in production due to enhanced completion techniques and more efficient drilling rigs; offset partially by |
• | natural production declines. |
Three Months Ended | Three Months | ||||||||||||||
March 31, | 2018 vs. 2017 | ||||||||||||||
Financial Results | 2018 | 2017 | Increase (Decrease) | ||||||||||||
(Millions of dollars) | |||||||||||||||
NGL sales | $ | 362.8 | $ | 245.5 | $ | 117.3 | 48 | % | |||||||
Condensate sales | 50.4 | 19.0 | 31.4 | * | |||||||||||
Residue natural gas sales | 255.0 | 210.5 | 44.5 | 21 | % | ||||||||||
Gathering, compression, dehydration and processing fees and other revenue | 39.8 | 186.3 | (146.5 | ) | (79 | %) | |||||||||
Cost of sales and fuel (exclusive of depreciation and operating costs) | (492.6 | ) | (488.4 | ) | 4.2 | 1 | % | ||||||||
Operating costs | (88.4 | ) | (71.3 | ) | 17.1 | 24 | % | ||||||||
Equity in net earnings from investments; excluding noncash impairment charges | 1.7 | 2.6 | (0.9 | ) | (35 | %) | |||||||||
Other | 1.9 | (0.2 | ) | 2.1 | * | ||||||||||
Adjusted EBITDA | $ | 130.6 | $ | 104.0 | $ | 26.6 | 26 | % | |||||||
Capital expenditures | $ | 111.7 | $ | 63.2 | $ | 48.5 | 77 | % |
• | an increase of $41.5 million due primarily to natural gas volume growth in the Williston Basin and the STACK and SCOOP areas, offset partially by natural production declines; offset partially by |
• | an increase of $17.1 million in operating costs due primarily to increased materials and supplies and outside services related to the growth of our operations and higher employee-related costs associated with labor and benefits. |
Three Months Ended | ||||||||
March 31, | ||||||||
Operating Information (a) | 2018 | 2017 | ||||||
Natural gas gathered (BBtu/d) | 2,460 | 1,985 | ||||||
Natural gas processed (BBtu/d) (b) | 2,285 | 1,863 | ||||||
NGL sales (MBbl/d) | 194 | 172 | ||||||
Residue natural gas sales (BBtu/d) | 964 | 793 | ||||||
Average contractual fee rate ($/MMBtu) | $ | 0.88 | $ | 0.83 |
• | Exchange services - we utilize our assets to gather, fractionate and/or treat, and transport unfractionated NGLs, thereby converting them into marketable NGL products shipped to a market center or customer-designated location. Many of these exchange volumes are under contracts with minimum volume commitments that provide a minimum level of revenues regardless of volumetric throughput. Our exchange services activities are primarily fee-based and include some rate-regulated tariffs; however, we also capture certain product price differentials through the fractionation process. |
• | Transportation and storage services - we transport NGL products and refined petroleum products, primarily under FERC-regulated tariffs. Tariffs specify the maximum rates we may charge our customers and the general terms and conditions for transportation service on our pipelines. Our storage activities consist primarily of fee-based NGL storage services at our Mid-Continent and Gulf Coast storage facilities. |
• | Optimization and marketing - we utilize our assets, contract portfolio and market knowledge to capture location, product and seasonal price differentials through the purchase and sale of NGLs and NGL products. We primarily transport NGL products between Conway, Kansas, and Mont Belvieu, Texas, to capture the location price differentials between the two market centers. Our marketing activities also include utilizing our natural gas liquids storage facilities to capture seasonal price differentials. A growing portion of our marketing activities serves truck and rail markets. Our isomerization activities capture the price differential when normal butane is converted into the more valuable iso-butane at our isomerization unit in Conway, Kansas. |
Three Months Ended | Three Months | ||||||||||||||
March 31, | 2018 vs. 2017 | ||||||||||||||
Financial Results | 2018 | 2017 | Increase (Decrease) | ||||||||||||
(Millions of dollars) | |||||||||||||||
NGL and condensate sales | $ | 2,552.8 | $ | 2,008.0 | $ | 544.8 | 27 | % | |||||||
Exchange service revenues and other | 86.2 | 333.3 | (247.1 | ) | (74 | %) | |||||||||
Transportation and storage revenues | 53.5 | 50.7 | 2.8 | 6 | % | ||||||||||
Cost of sales and fuel (exclusive of depreciation and operating costs) | (2,281.1 | ) | (2,048.7 | ) | 232.4 | 11 | % | ||||||||
Operating costs | (88.6 | ) | (78.4 | ) | 10.2 | 13 | % | ||||||||
Equity in net earnings from investments | 16.4 | 13.7 | 2.7 | 20 | % | ||||||||||
Other | 2.9 | (0.4 | ) | 3.3 | * | ||||||||||
Adjusted EBITDA | $ | 342.1 | $ | 278.2 | $ | 63.9 | 23 | % | |||||||
Capital expenditures | $ | 124.9 | $ | 20.5 | $ | 104.4 | * |
• | an increase of $43.4 million in exchange services due to increased volumes, including higher ethane recovery in the Mid-Continent region, primarily in the STACK and SCOOP areas, and increased volumes in the Williston and Permian Basins, offset partially by lower volumes in the Barnett Shale and the impact of severe winter weather in 2018; |
• | an increase of $24.9 million in optimization and marketing due primarily to wider location price differentials and the sale of NGL inventory previously held; and |
• | an increase of $2.7 million in equity in net earnings from investments due primarily to higher volumes delivered to Overland Pass Pipeline from our Bakken NGL Pipeline; offset partially by |
• | an increase of $10.2 million in operating costs due primarily to higher employee-related costs associated with labor and benefits, timing of routine maintenance projects and ad valorem taxes. |
Three Months Ended | ||||||||
March 31, | ||||||||
Operating Information | 2018 | 2017 | ||||||
NGLs transported-gathering lines (MBbl/d) (a) | 855 | 764 | ||||||
NGLs fractionated (MBbl/d) (b) | 693 | 574 | ||||||
NGLs transported-distribution lines (MBbl/d) (a) | 597 | 550 | ||||||
Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ($/gallon) | $ | 0.09 | $ | 0.03 |
• | Midwestern Gas Transmission, which is a bidirectional system that interconnects with Tennessee Gas Transmission Company’s pipeline near Portland, Tennessee, and with several interstate pipelines that have access to both the Utica Shale and the Marcellus Shale at the Chicago Hub near Joliet, Illinois; |
• | Viking Gas Transmission, which is a bidirectional system that interconnects with a TransCanada Corporation pipeline at the United States border near Emerson, Canada, and ANR Pipeline Company near Marshfield, Wisconsin; |
• | Guardian Pipeline, which interconnects with several pipelines at the Chicago Hub near Joliet, Illinois, and with local natural gas distribution companies in Wisconsin; and |
• | OkTex Pipeline, which has interconnections with several pipelines in Oklahoma, Texas and New Mexico. |
• | Firm service - Customers reserve a fixed quantity of pipeline capacity for a specified period of time, which obligates the customer to pay regardless of usage. Under this type of contract, the customer pays a monthly fixed fee and |
• | Interruptible service - Under interruptible service transportation agreements, the customer may utilize available capacity after firm service requests are satisfied. The customer is not guaranteed use of our pipelines unless excess capacity is available. |
• | Firm service - Customers reserve a specific quantity of storage capacity, including injection and withdrawal rights, and generally pay fixed fees based on the quantity of capacity reserved plus an injection and withdrawal fee. Firm storage contracts typically have terms longer than one year. |
• | Park-and-loan service - An interruptible service offered to customers providing the ability to park (inject) or loan (withdraw) natural gas into or out of our storage, typically for monthly or seasonal terms. Customers reserve the right to park or loan natural gas based on a specified quantity, including injection and withdrawal rights when capacity is available. |
Three Months Ended | Three Months | ||||||||||||||
March 31, | 2018 vs. 2017 | ||||||||||||||
Financial Results | 2018 | 2017 | Increase (Decrease) | ||||||||||||
(Millions of dollars) | |||||||||||||||
Transportation revenues | $ | 81.8 | $ | 82.0 | $ | (0.2 | ) | — | % | ||||||
Storage revenues | 16.5 | 14.2 | 2.3 | 16 | % | ||||||||||
Residue natural gas sales and other revenues | 11.6 | 10.6 | 1.0 | 9 | % | ||||||||||
Cost of sales and fuel (exclusive of depreciation and and operating costs) | (5.5 | ) | (16.6 | ) | (11.1 | ) | (67 | %) | |||||||
Operating costs | (33.2 | ) | (31.6 | ) | 1.6 | 5 | % | ||||||||
Equity in net earnings from investments | 22.1 | 23.2 | (1.1 | ) | (5 | %) | |||||||||
Other | 0.3 | 1.2 | (0.9 | ) | (75 | %) | |||||||||
Adjusted EBITDA | $ | 93.6 | $ | 83.0 | $ | 10.6 | 13 | % | |||||||
Capital expenditures | $ | 19.9 | $ | 25.0 | $ | (5.1 | ) | (20 | %) |
• | an increase of $4.8 million from transportation services due primarily to increased interruptible transportation volumes; |
• | an increase of $4.8 million from natural gas storage services due primarily to higher park-and-loan activity; and |
• | an increase of $3.2 million from net retained fuel due primarily to higher natural gas volumes retained; offset partially by |
• | an increase of $1.6 million in operating costs due primarily to employee-related costs associated with labor and benefits; and |
• | a decrease of $1.1 million in equity in net earnings from investments due primarily to lower settled rates on Northern Border Pipeline. |
Three Months Ended | ||||||
March 31, | ||||||
Operating Information (a) | 2018 | 2017 | ||||
Natural gas transportation capacity contracted (MDth/d) | 6,779 | 6,757 | ||||
Transportation capacity subscribed | 97 | % | 97 | % |
Three Months Ended | ||||||||
March 31, | ||||||||
2018 | 2017 | |||||||
Reconciliation of net income to adjusted EBITDA | (Thousands of dollars) | |||||||
Net income | $ | 266,049 | $ | 186,185 | ||||
Add: | ||||||||
Interest expense, net of capitalized interest | 115,725 | 116,462 | ||||||
Depreciation and amortization | 104,237 | 99,419 | ||||||
Income taxes | 75,771 | 54,941 | ||||||
Noncash compensation expense | 9,226 | 1,647 | ||||||
Other noncash items and equity AFUDC | (672 | ) | 958 | |||||
Adjusted EBITDA | $ | 570,336 | $ | 459,612 | ||||
Reconciliation of segment adjusted EBITDA to adjusted EBITDA | ||||||||
Segment adjusted EBITDA: | ||||||||
Natural Gas Gathering and Processing | $ | 130,551 | $ | 103,967 | ||||
Natural Gas Liquids | 342,079 | 278,229 | ||||||
Natural Gas Pipelines | 93,625 | 82,958 | ||||||
Other | 4,081 | (5,542 | ) | |||||
Adjusted EBITDA | $ | 570,336 | $ | 459,612 |
Rating Agency | Rating | Outlook |
Moody’s | Baa3 | Stable |
S&P | BBB | Stable |
Variances | |||||||||||
Three Months Ended | 2018 vs. 2017 | ||||||||||
March 31, | Favorable (Unfavorable) | ||||||||||
2018 | 2017 | ||||||||||
(Millions of dollars) | |||||||||||
Total cash provided by (used in): | |||||||||||
Operating activities | $ | 495.3 | $ | 269.1 | $ | 226.2 | |||||
Investing activities | (255.6 | ) | (109.5 | ) | (146.1 | ) | |||||
Financing activities | (259.4 | ) | (97.7 | ) | (161.7 | ) | |||||
Change in cash and cash equivalents | (19.7 | ) | 61.9 | (81.6 | ) | ||||||
Cash and cash equivalents at beginning of period | 37.2 | 248.9 | (211.7 | ) | |||||||
Cash and cash equivalents at end of period | $ | 17.5 | $ | 310.8 | $ | (293.3 | ) |
• | the effects of weather and other natural phenomena, including climate change, on our operations, demand for our services and energy prices; |
• | competition from other United States and foreign energy suppliers and transporters, as well as alternative forms of energy, including, but not limited to, solar power, wind power, geothermal energy and biofuels such as ethanol and biodiesel; |
• | the capital intensive nature of our businesses; |
• | the profitability of assets or businesses acquired or constructed by us; |
• | our ability to make cost-saving changes in operations; |
• | risks of marketing, trading and hedging activities, including the risks of changes in energy prices or the financial condition of our counterparties; |
• | the uncertainty of estimates, including accruals and costs of environmental remediation; |
• | the timing and extent of changes in energy commodity prices; |
• | the effects of changes in governmental policies and regulatory actions, including changes with respect to income and other taxes, pipeline safety, environmental compliance, climate change initiatives and authorized rates of recovery of natural gas and natural gas transportation costs; |
• | the impact on drilling and production by factors beyond our control, including the demand for natural gas and crude oil; producers’ desire and ability to obtain necessary permits; reserve performance; and capacity constraints on the pipelines that transport crude oil, natural gas and NGLs from producing areas and our facilities; |
• | difficulties or delays experienced by trucks, railroads or pipelines in delivering products to or from our terminals or pipelines; |
• | changes in demand for the use of natural gas, NGLs and crude oil because of market conditions caused by concerns about climate change; |
• | the impact of unforeseen changes in interest rates, debt and equity markets, inflation rates, economic recession and other external factors over which we have no control, including the effect on pension and postretirement expense and funding resulting from changes in equity and bond market returns; |
• | our indebtedness and guarantee obligations could make us vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds and/or place us at competitive disadvantages compared with our competitors that have less debt or have other adverse consequences; |
• | actions by rating agencies concerning our credit; |
• | the results of administrative proceedings and litigation, regulatory actions, rule changes and receipt of expected clearances involving any local, state or federal regulatory body, including the FERC, the National Transportation Safety Board, the PHMSA, the EPA and CFTC; |
• | our ability to access capital at competitive rates or on terms acceptable to us; |
• | risks associated with adequate supply to our gathering, processing, fractionation and pipeline facilities, including production declines that outpace new drilling or extended periods of ethane rejection; |
• | the risk that material weaknesses or significant deficiencies in our internal controls over financial reporting could emerge or that minor problems could become significant; |
• | the impact and outcome of pending and future litigation; |
• | the ability to market pipeline capacity on favorable terms, including the effects of: |
– | future demand for and prices of natural gas, NGLs and crude oil; |
– | competitive conditions in the overall energy market; |
– | availability of supplies of Canadian and United States natural gas and crude oil; and |
– | availability of additional storage capacity; |
• | performance of contractual obligations by our customers, service providers, contractors and shippers; |
• | the timely receipt of approval by applicable governmental entities for construction and operation of our pipeline and other projects and required regulatory clearances; |
• | our ability to acquire all necessary permits, consents or other approvals in a timely manner, to promptly obtain all necessary materials and supplies required for construction, and to construct gathering, processing, storage, fractionation and transportation facilities without labor or contractor problems; |
• | the mechanical integrity of facilities operated; |
• | demand for our services in the proximity of our facilities; |
• | our ability to control operating costs; |
• | acts of nature, sabotage, terrorism or other similar acts that cause damage to our facilities or our suppliers’ or shippers’ facilities; |
• | economic climate and growth in the geographic areas in which we do business; |
• | the risk of a prolonged slowdown in growth or decline in the United States or international economies, including liquidity risks in United States or foreign credit markets; |
• | the impact of recently issued and future accounting updates and other changes in accounting policies; |
• | the possibility of future terrorist attacks or the possibility or occurrence of an outbreak of, or changes in, hostilities or changes in the political conditions throughout the world; |
• | the risk of increased costs for insurance premiums, security or other items as a consequence of terrorist attacks; |
• | risks associated with pending or possible acquisitions and dispositions, including our ability to finance or integrate any such acquisitions and any regulatory delay or conditions imposed by regulatory bodies in connection with any such acquisitions and dispositions; |
• | the impact of uncontracted capacity in our assets being greater or less than expected; |
• | the ability to recover operating costs and amounts equivalent to income taxes, costs of property, plant and equipment and regulatory assets in our state and FERC-regulated rates; |
• | the composition and quality of the natural gas and NGLs we gather and process in our plants and transport on our pipelines; |
• | the efficiency of our plants in processing natural gas and extracting and fractionating NGLs; |
• | the impact of potential impairment charges; |
• | the risk inherent in the use of information systems in our respective businesses, implementation of new software and hardware, and the impact on the timeliness of information for financial reporting; |
• | our ability to control construction costs and completion schedules of our pipelines and other projects; and |
• | the risk factors listed in the reports we have filed and may file with the SEC, which are incorporated by reference. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Nine Months Ending December 31, 2018 | |||||||||
Volumes Hedged | Average Price | Percentage Hedged | |||||||
NGLs - excluding ethane (MBbl/d) - Conway/Mont Belvieu | 8.1 | $ | 0.66 | / gallon | 77% | ||||
Condensate (MBbl/d) - WTI-NYMEX | 2.4 | $ | 52.84 | / Bbl | 79% | ||||
Natural gas (BBtu/d) - NYMEX and basis | 67.1 | $ | 2.79 | / MMBtu | 89% |
Year Ending December 31, 2019 | |||||||||
Volumes Hedged | Average Price | Percentage Hedged | |||||||
NGLs - excluding ethane (MBbl/d) - Conway/Mont Belvieu | 7.2 | $ | 0.71 | / gallon | 71% | ||||
Condensate (MBbl/d) - WTI-NYMEX | 2.2 | $ | 56.90 | / Bbl | 65% |
• | a $0.01 per-gallon change in the composite price of NGLs would change adjusted EBITDA for the nine months ending December 31, 2018, and for the year ending December 31, 2019, by approximately $1.8 million and $2.9 million, respectively; |
• | a $1.00 per-barrel change in the price of crude oil would change adjusted EBITDA for the nine months ending December 31, 2018, and for the year ending December 31, 2019, by approximately $0.3 million and $0.6 million, respectively; and |
• | a $0.10 per-MMBtu change in the price of residue natural gas would change adjusted EBITDA for the nine months ending December 31, 2018, and for the year ending December 31, 2019, by approximately $0.2 million and $2.8 million, respectively. |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
Exhibit No. | Exhibit Description |
3.1 | |
3.2 | |
10.1 | |
10.2 | |
10.3 | |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
101.INS | XBRL Instance Document. |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.CAL | XBRL Taxonomy Calculation Linkbase Document. |
101.DEF | XBRL Taxonomy Extension Definitions Document. |
101.LAB | XBRL Taxonomy Label Linkbase Document. |
101.PRE | XBRL Taxonomy Presentation Linkbase Document. |
ONEOK, Inc. | ||
Registrant | ||
Date: May 2, 2018 | By: | /s/ Walter S. Hulse III |
Walter S. Hulse III | ||
Chief Financial Officer and | ||
Executive Vice President, Strategic Planning | ||
and Corporate Affairs | ||
(Principal Financial Officer) |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Terry K. Spencer | |
Terry K. Spencer | |
Chief Executive Officer |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Walter S. Hulse III | |
Walter S. Hulse III | |
Chief Financial Officer |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 23, 2018 |
|
Document Information [Line Items] | ||
Entity Registrant Name | ONEOK INC /NEW/ | |
Entity Central Index Key | 0001039684 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 411,076,188 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 |
CONSOLIDATED STATEMENT OF INCOME (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Interest expense (net of capitalized interest) | $ 2,038 | $ 1,441 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Net income | $ 266,049 | $ 186,185 |
Other comprehensive income (loss), net of tax | ||
Unrealized gains (losses) on derivatives, net of tax of $(10,312) and $(4,401), respectively | 34,524 | 24,456 |
Realized (gains) losses on derivatives recognized in net income, net of tax of $(3,578) and $(3,365), respectively | 11,976 | 17,283 |
Change in pension and postretirement benefit plan liability, net of tax of $(781) and $(1,360) respectively. | 2,615 | 2,041 |
Other comprehensive income (loss) on investments in unconsolidated affiliates, net of tax of $(844) and $(58), respectively | 2,824 | 325 |
Total other comprehensive income (loss), net of tax | 51,939 | 44,105 |
Comprehensive income | 317,988 | 230,290 |
Less: Comprehensive income attributable to noncontrolling interests | 1,541 | 127,641 |
Comprehensive income attributable to ONEOK | $ 316,447 | $ 102,649 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (PARANTHETICAL) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Unrealized Gains (Losses) on Derivatives, Tax | $ (10,312) | $ (4,401) |
Realized (Gains) Losses on Derivatives in Net Income, Tax | (3,578) | (3,365) |
Change in Pension and Postretirement Benefit Plan Liability, Tax | (781) | (1,360) |
Other Comprehensive Income (Loss) on Investments in Unconsolidated Affiliates, Tax | $ (844) | $ (58) |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Equity (Note E) | ||
Common stock, shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares, authorized (in shares) | 1,200,000,000 | 1,200,000,000 |
Common stock, shares, issued (in shares) | 445,016,234 | 423,166,234 |
Common stock, shares, outstanding (in shares) | 411,073,529 | 388,703,543 |
Treasury stock, shares (in shares) | 33,942,705 | 34,462,691 |
Preferred stock, shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares, issued (in shares) | 20,000 | 20,000 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Thousands |
Total |
Common Stock |
Preferred Stock |
Additional Paid-in Capital |
Accumulated Other Comprehensive Income (Loss) |
Retained Earnings |
Treasury Stock |
Noncontrolling Interests in Consolidated Subsidiaries |
---|---|---|---|---|---|---|---|---|
Cumulative effect adjustment for adoption of ASUs | $ 73,368 | $ 0 | $ 0 | $ 0 | $ 0 | $ 73,368 | $ 0 | $ 0 |
Shares, issued, beginning balance at Dec. 31, 2016 | 245,811,180 | 0 | ||||||
Total equity, beginning balance at Dec. 31, 2016 | 3,428,915 | $ 2,458 | $ 0 | 1,234,314 | (154,350) | 0 | (893,677) | 3,240,170 |
Net income | 186,185 | 0 | 0 | 0 | 0 | 87,361 | 0 | 98,824 |
Other comprehensive income (loss) (Note F) | 44,105 | 0 | 0 | 0 | 15,288 | 0 | 0 | 28,817 |
Common Stock Issued | 3,201 | $ 0 | 0 | (2,506) | 0 | 0 | 5,707 | 0 |
Stock Issued During Period, Shares, Other | 0 | |||||||
Common stock dividends | (129,842) | $ 0 | 0 | 0 | 0 | (129,842) | 0 | 0 |
Distributions to Noncontrolling Interests | (136,680) | 0 | 0 | 0 | 0 | 0 | 0 | (136,680) |
Other | 261 | $ 0 | $ 0 | 261 | 0 | 0 | 0 | 0 |
Shares, issued, ending balance at Mar. 31, 2017 | 245,811,180 | 0 | ||||||
Total equity, ending balance at Mar. 31, 2017 | 3,469,513 | $ 2,458 | $ 0 | 1,232,069 | (139,062) | 30,887 | (887,970) | 3,231,131 |
Cumulative effect adjustment for adoption of ASUs | 1,719 | $ 0 | $ 0 | 0 | (38,101) | 39,803 | 0 | 17 |
Shares, issued, beginning balance at Dec. 31, 2017 | 423,166,234 | 20,000 | ||||||
Total equity, beginning balance at Dec. 31, 2017 | 5,685,352 | $ 4,232 | $ 0 | 6,588,878 | (188,530) | 0 | (876,713) | 157,485 |
Net income | 266,049 | 0 | 0 | 0 | 0 | 264,508 | 0 | 1,541 |
Other comprehensive income (loss) (Note F) | 51,939 | 0 | 0 | 0 | 51,939 | 0 | 0 | 0 |
Common Stock Issued | 1,182,693 | $ 218 | 0 | 1,169,247 | 0 | 0 | 13,228 | 0 |
Stock Issued During Period, Shares, Other | 21,850,000 | |||||||
Common stock dividends | (316,271) | $ 0 | 0 | (11,960) | 0 | (304,311) | 0 | 0 |
Preferred stock dividends | (275) | 0 | 0 | (275) | 0 | 0 | 0 | 0 |
Distributions to Noncontrolling Interests | (1,500) | 0 | 0 | 0 | 0 | 0 | 0 | (1,500) |
Contributions from noncontrolling interests | 10,263 | 0 | 0 | 0 | 0 | 0 | 0 | 10,263 |
Other | (10,717) | $ 0 | $ 0 | (10,717) | 0 | 0 | 0 | 0 |
Shares, issued, ending balance at Mar. 31, 2018 | 445,016,234 | 20,000 | ||||||
Total equity, ending balance at Mar. 31, 2018 | $ 6,869,252 | $ 4,450 | $ 0 | $ 7,735,173 | $ (174,692) | $ 0 | $ (863,485) | $ 167,806 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Parenthetical - $ / shares |
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Statement of Stockholders' Equity [Abstract] | ||
Dividends paid (in dollars per share) | $ 0.770 | $ 0.615 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Notes) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Text Block] | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Our accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. These statements have been prepared in accordance with GAAP and reflect all adjustments that, in our opinion, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The 2017 year-end Consolidated Balance Sheet data was derived from our audited financial statements but does not include all disclosures required by GAAP. Certain reclassifications have been made in the prior-year financial statements to conform to the current year presentation. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements in our Annual Report. Merger Transaction - On June 30, 2017, we completed the acquisition of all of the outstanding common units of ONEOK Partners that we did not already own at a fixed exchange ratio of 0.985 of a share of our common stock for each ONEOK Partners common unit. We issued 168.9 million shares of our common stock to third-party common unitholders of ONEOK Partners in exchange for all of the 171.5 million outstanding common units of ONEOK Partners that we previously did not own. As a result of the completion of the Merger Transaction, common units of ONEOK Partners are no longer publicly traded. Prior to June 30, 2017, we and our subsidiaries owned all of the general partner interest, which included incentive distribution rights, and a portion of the limited partner interest, which together represented a 41.2 percent ownership interest in ONEOK Partners. The earnings of ONEOK Partners that are attributed to its units held by the public until June 30, 2017, are reported as “Net income attributable to noncontrolling interest” in our accompanying Consolidated Statements of Income. Our general partner incentive distribution rights effectively terminated at the closing of the Merger Transaction. Our significant accounting policies are consistent with those disclosed in Note A of the Notes to Consolidated Financial Statements in our Annual Report, except as described below for accounting standards adopted this quarter. Recently Issued Accounting Standards Update - Changes to GAAP are established by the Financial Accounting Standards Board (FASB) in the form of ASUs to the FASB Accounting Standards Codification. We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or clarifications of ASUs listed below. We also exclude ASUs not yet adopted that were disclosed in our Annual Report to not materially impact us. The following tables provide a brief description of recent accounting pronouncements and our analysis of the effects on our financial statements:
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FAIR VALUE MEASUREMENTS (Notes) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Determining Fair Value - We define fair value as the price that would be received from the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date. We use market and income approaches to determine the fair value of our assets and liabilities and consider the markets in which the transactions are executed. We measure the fair value of a group of financial assets and liabilities consistent with how a market participant would price the net risk exposure at the measurement date. While many of the contracts in our derivative portfolio are executed in liquid markets where price transparency exists, some contracts are executed in markets for which market prices may exist, but the market may be relatively inactive. This results in limited price transparency that requires management’s judgment and assumptions to estimate fair values. For certain transactions, we utilize modeling techniques using NYMEX-settled pricing data and implied forward LIBOR curves. Inputs into our fair value estimates include commodity-exchange prices, over-the-counter quotes, historical correlations of pricing data, data obtained from third-party pricing services and LIBOR and other liquid money-market instrument rates. We validate our valuation inputs with third-party information and settlement prices from other sources, where available. In addition, as prescribed by the income approach, we compute the fair value of our derivative portfolio by discounting the projected future cash flows from our derivative assets and liabilities to present value using interest-rate yields to calculate present-value discount factors derived from LIBOR, Eurodollar futures and the LIBOR interest-rate swaps market. We also take into consideration the potential impact on market prices of liquidating positions in an orderly manner over a reasonable period of time under current market conditions. We consider current market data in evaluating counterparties’, as well as our own, nonperformance risk, net of collateral, by using specific and sector bond yields and monitoring the credit default swap markets. Although we use our best estimates to determine the fair value of the derivative contracts we have executed, the ultimate market prices realized could differ from our estimates, and the differences could be material. The fair value of our forward-starting interest-rate swaps are determined using financial models that incorporate the implied forward LIBOR yield curve for the same period as the future interest-rate swap settlements. Fair Value Hierarchy - At each balance sheet date, we utilize a fair value hierarchy to classify fair value amounts recognized or disclosed in our financial statements based on the observability of inputs used to estimate such fair value. The levels of the hierarchy are described below:
Determining the appropriate classification of our fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data. We categorize derivatives for which fair value is determined using multiple inputs within a single level, based on the lowest level input that is significant to the fair value measurement in its entirety. Recurring Fair Value Measurements - The following tables set forth our recurring fair value measurements for the periods indicated:
(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis. We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us. At March 31, 2018, we held no cash and posted $18.5 million of cash with various counterparties, including $0.7 million of cash collateral that is offsetting derivative net liability positions under master-netting arrangements in the table above. The remaining $17.8 million of cash collateral in excess of derivative net liability positions is included in other current assets in our Consolidated Balance Sheets.
(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis. We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us. At December 31, 2017, we held no cash and posted $49.7 million of cash with various counterparties, including $29.5 million of cash collateral that is offsetting derivative net liability positions under master-netting arrangements in the table above. The remaining $20.2 million of cash collateral in excess of derivative net liability positions is included in other current assets in our Consolidated Balance Sheets. The following table sets forth a reconciliation of our Level 3 fair value measurements for the periods indicated:
(a) - Included in commodity sales revenues in our Consolidated Statements of Income. Realized/unrealized gains (losses) include the realization of our derivative contracts through maturity. During the three months ended March 31, 2018 and 2017, gains or losses included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the end of each reporting period were not material. We recognize transfers into and out of the levels in the fair value hierarchy as of the end of each reporting period. During the three months ended March 31, 2018 and 2017, there were no transfers between levels. Other Financial Instruments - The approximate fair value of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings is equal to book value due to the short-term nature of these items. Our cash and cash equivalents are composed of bank and money market accounts and are classified as Level 1. Our short-term borrowings are classified as Level 2 since the estimated fair value of the short-term borrowings can be determined using information available in the commercial paper market. The estimated fair value of our consolidated long-term debt, including current maturities, was $8.7 billion and $9.3 billion at March 31, 2018, and December 31, 2017, respectively. The book value of our consolidated long-term debt, including current maturities, was $8.0 billion and $8.5 billion at March 31, 2018, and December 31, 2017, respectively. The estimated fair value of the aggregate of our and ONEOK Partners’ senior notes outstanding was determined using quoted market prices for similar issues with similar terms and maturities. The estimated fair value of our consolidated long-term debt is classified as Level 2. |
RISK MANAGEMENT AND HEDGING ACTIVITIES USING DERIVATIVES (Notes) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RISK MANAGEMENT AND HEDGING ACTIVITIES USING DERIVATIVES | RISK-MANAGEMENT AND HEDGING ACTIVITIES USING DERIVATIVES Risk-Management Activities - We are sensitive to changes in natural gas, crude oil and NGL prices, principally as a result of contractual terms under which these commodities are processed, purchased and sold. We are also subject to the risk of interest-rate fluctuation in the normal course of business. We use physical-forward purchases and sales and financial derivatives to secure a certain price for a portion of our natural gas, condensate and NGL products; to reduce our exposure to commodity price and interest-rate fluctuations; and to achieve more predictable cash flows. We follow established policies and procedures to assess risk and approve, monitor and report our risk-management activities. We have not used these instruments for trading purposes. Commodity price risk - Commodity price risk refers to the risk of loss in cash flows and future earnings arising from adverse changes in the price of natural gas, NGLs and condensate. We use the following commodity derivative instruments to reduce the near-term commodity price risk associated with a portion of the forecasted sales of these commodities:
We may also use other instruments including collars to mitigate commodity price risk. A collar is a combination of a purchased put option and a sold call option, which places a floor and a ceiling price for commodity sales being hedged. In our Natural Gas Gathering and Processing segment, we are exposed to commodity price risk as a result of retaining a portion of the commodity sales proceeds associated with our POP with fee contracts. Under certain POP with fee contracts, our fees and POP percentage may increase or decrease if production volumes, delivery pressures or commodity prices change relative to specified thresholds. We also are exposed to basis risk between the various production and market locations where we buy and sell commodities. As part of our hedging strategy, we use the previously described commodity derivative financial instruments and physical-forward contracts to reduce the impact of price fluctuations related to natural gas, NGLs and condensate. In our Natural Gas Liquids segment, we are primarily exposed to commodity price risk resulting from the relative values of the various NGL products to each other, the value of NGLs in storage and the relative value of NGLs to natural gas. We are also exposed to location price differential risk as a result of the relative value of NGL purchases at one location and sales at another location, primarily related to our optimization and marketing businesses. We utilize physical-forward contracts and commodity derivative financial instruments to reduce the impact of price fluctuations related to NGLs. In our Natural Gas Pipelines segment, we are exposed to commodity price risk because our intrastate and interstate natural gas pipelines retain natural gas from our customers for operations or as part of our fee for services provided. When the amount of natural gas consumed in operations by these pipelines differs from the amount provided by our customers, our pipelines must buy or sell natural gas, or store or use natural gas from inventory, which can expose this segment to commodity price risk depending on the regulatory treatment for this activity. To the extent that commodity price risk in our Natural Gas Pipelines segment is not mitigated by fuel cost-recovery mechanisms, we may use physical-forward sales or purchases to reduce the impact of price fluctuations related to natural gas. At March 31, 2018, and December 31, 2017, there were no financial derivative instruments with respect to our natural gas pipeline operations. Interest-rate risk - We manage interest-rate risk through the use of fixed-rate debt, floating-rate debt and interest-rate swaps. Interest-rate swaps are agreements to exchange interest payments at some future point based on specified notional amounts. In January 2018, we settled the remaining $500 million of our interest-rate swaps used to hedge our LIBOR-based interest payments. In March 2018, we entered into forward-starting interest-rate swaps with notional amounts totaling $750 million to hedge the variability of interest payments on a portion of our forecasted debt issuances that may result from changes in the benchmark interest rate before the debt is issued. At March 31, 2018, and December 31, 2017, we had forward-starting interest-rate swaps with notional amounts totaling $2.0 billion and $1.3 billion, respectively, to hedge the variability of interest payments on a portion of our forecasted debt issuances. At December 31, 2017, we had interest-rate swaps with a notional amount totaling $500 million to hedge the variability of our LIBOR-based interest payments. All of our interest-rate swaps are designated as cash flow hedges. Accounting Treatment - Our accounting treatment of derivative instruments is consistent with that disclosed in Note A of the Notes to Consolidated Financial Statements in our Annual Report, updated for the adoption of ASU 2017-12. Fair Values of Derivative Instruments - See Note B for a discussion of the inputs associated with our fair value measurements. The following table sets forth the fair values of our derivative instruments presented on a gross basis for the periods indicated:
Notional Quantities for Derivative Instruments - The following table sets forth the notional quantities for derivative instruments held for the periods indicated:
These notional amounts are used to summarize the volume of financial instruments; however, they do not reflect the extent to which the positions offset one another and, consequently, do not reflect our actual exposure to market or credit risk. Cash Flow Hedges - At March 31, 2018, our Consolidated Balance Sheet reflected a net loss of $174.7 million in accumulated other comprehensive loss. The portion of accumulated other comprehensive loss attributable to our commodity derivative financial instruments is an unrealized loss of $1.4 million, net of tax, which is expected to be realized within the next two years as the forecasted transactions affect earnings. If commodity prices remain at current levels, we will realize approximately $3.2 million in net losses, net of tax, over the next 12 months and approximately $1.8 million in net gains, net of tax, thereafter. The amount deferred in accumulated other comprehensive loss attributable to our settled interest-rate swaps is a loss of $104.0 million, net of tax, which will be recognized over the life of the long-term, fixed-rate debt, including losses of $17.5 million, net of tax, that will be reclassified into earnings during the next 12 months as the hedged items affect earnings. The remaining amounts in accumulated other comprehensive loss are attributable primarily to our pension and postretirement benefit plan obligations, which are expected to be amortized over the average remaining service period of employees participating in these plans. The following table sets forth the unrealized effect of cash flow hedges recognized in other comprehensive income (loss) for the periods indicated:
The following table sets forth the effect of cash flow hedges in our Consolidated Statements of Income for the periods indicated:
Credit Risk - We monitor the creditworthiness of our counterparties and compliance with policies and limits established by our Risk Oversight and Strategy Committee. We maintain credit policies with regard to our counterparties that we believe minimize overall credit risk. These policies include an evaluation of potential counterparties’ financial condition (including credit ratings, bond yields and credit default swap rates), collateral requirements under certain circumstances and the use of standardized master-netting agreements that allow us to net the positive and negative exposures associated with a single counterparty. We have counterparties whose credit is not rated, and for those customers, we use internally developed credit ratings. From time to time, we may enter into financial derivative instruments that contain provisions that require us to maintain an investment-grade credit rating from S&P and/or Moody’s. If our credit ratings on our senior unsecured long-term debt were to decline below investment grade, the counterparties to the derivative instruments could request collateralization on derivative instruments in net liability positions. There were no financial derivative instruments with contingent features related to credit risk at March 31, 2018. The counterparties to our derivative contracts typically consist of major energy companies, financial institutions and commercial and industrial end users. This concentration of counterparties may affect our overall exposure to credit risk, either positively or negatively, in that the counterparties may be affected similarly by changes in economic, regulatory or other conditions. Based on our policies, exposures, credit and other reserves, we do not anticipate a material adverse effect on our financial position or results of operations as a result of counterparty nonperformance. At March 31, 2018, the credit exposure from our derivative assets is with investment-grade companies in the financial services sector. |
DEBT DEBT (Notes) |
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Debt [Text Block] | DEBT The following table sets forth our consolidated debt for the periods indicated:
(a) - Individual issuances of commercial paper under our commercial paper program generally mature in 90 days or less. These issuances are supported by and reduce the borrowing capacity under our $2.5 Billion Credit Agreement. $2.5 Billion Credit Agreement - Our $2.5 Billion Credit Agreement is a $2.5 billion revolving credit facility and contains certain financial, operational and legal covenants. Among other things, these covenants include maintaining a ratio of indebtedness to adjusted EBITDA (EBITDA, as defined in our $2.5 Billion Credit Agreement, adjusted for all noncash charges and increased for projected EBITDA from certain lender-approved capital expansion projects) of no more than 5.5 to 1 at March 31, 2018, and for the subsequent quarter and 5.0 to 1 thereafter. Once the covenant decreases to 5.0 to 1, if we consummate one or more acquisitions in which the aggregate purchase is $25 million or more, the allowable ratio of indebtedness to adjusted EBITDA will increase to 5.5 to 1 for the quarter in which the acquisition is completed and the two following quarters. Our $2.5 Billion Credit Agreement includes a $100 million sublimit for the issuance of standby letters of credit and a $200 million sublimit for swingline loans. Under the terms of our $2.5 Billion Credit Agreement, we may request an increase in the size of the facility to an aggregate of $3.5 billion by either commitments from new lenders or increased commitments from existing lenders. Our $2.5 Billion Credit Agreement contains provisions for an applicable margin rate and an annual facility fee, both of which adjust with changes in our credit ratings. Based on our current credit ratings, borrowings, if any, will accrue at LIBOR plus 110 basis points, and the annual facility fee is 15 basis points. We have the option to request two one-year extensions, subject to lender approval, which may be used for working capital, capital expenditures, acquisitions and mergers, the issuance of letters of credit and for other general corporate purposes. At March 31, 2018, we had no borrowings outstanding, our ratio of indebtedness to adjusted EBITDA was 3.7 to 1, and we were in compliance with all covenants under our $2.5 Billion Credit Agreement. Repayments - In January 2018, we repaid the remaining $500 million balance outstanding on the Term Loan Agreement due 2019 with a combination of cash on hand and short-term borrowings. Debt Guarantees - Effective June 30, 2017, with the Merger Transaction, we, ONEOK Partners and the Intermediate Partnership issued, to the extent not already in place, guarantees of the indebtedness of ONEOK and ONEOK Partners. |
EQUITY (Notes) |
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EQUITY | EQUITY Ownership Interest in ONEOK Partners - As a result of the Merger Transaction in 2017, we and our subsidiaries owned 100 percent of ONEOK Partners at March 31, 2018, and December 31, 2017. At March 31, 2018, the caption “Noncontrolling interests” on our Consolidated Balance Sheet reflects only the 20 percent of WTLPG that we do not own. Equity Issuances - In January 2018, we completed an underwritten public offering of 21.9 million shares of our common stock at a public offering price of $54.50 per share, generating net proceeds of $1.2 billion. We used the net proceeds from this offering to fund capital expenditures and for general corporate purposes, which included repaying a portion of our outstanding indebtedness. In July 2017, we established an “at-the-market” equity program for the offer and sale from time to time of our common stock up to an aggregate amount of $1 billion. The program allows us to offer and sell our common stock at prices we deem appropriate through a sales agent. Sales of our common stock may be made by means of ordinary brokers’ transactions on the NYSE, in block transactions or as otherwise agreed to between us and the sales agent. We are under no obligation to offer and sell common stock under the program. During the three months ended March 31, 2018, no shares were sold through our “at-the-market” equity program. During the year ended December 31, 2017, we sold 8.4 million shares of common stock through our “at-the-market” equity program that resulted in net proceeds of $448.3 million. The net proceeds from these issuances were used for general corporate purposes, including repayment of outstanding indebtedness and to fund capital expenditures. Dividends - Holders of our common stock share equally in any dividend declared by our board of directors, subject to the rights of the holders of outstanding preferred stock. Dividends paid on our common stock in February 2018 were $0.77 per share. A dividend of $0.795 per share was declared for shareholders of record at the close of business on April 30, 2018, payable May 15, 2018. The Series E Preferred Stock pays quarterly dividends on each share of Series E Preferred Stock, when, as and if declared by our Board of Directors, at a rate of 5.5 percent per year. We paid dividends for the Series E Preferred Stock of $0.6 million in 2017 and $0.3 million in February 2018. Dividends totaling $0.3 million were declared for the Series E Preferred Stock and are payable May 15, 2018. Cash Distributions - Prior to the consummation of the Merger Transaction, we received distributions from ONEOK Partners on our common and Class B units and our 2 percent general partner interest, which included our incentive distribution rights. As a result of the Merger Transaction in 2017, we are entitled to receive all available ONEOK Partners cash. Our incentive distribution rights effectively terminated at the close of the Merger Transaction. The following table sets forth ONEOK Partners’ distributions paid during the period prior to the closing of the Merger Transaction:
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ACCUMULATED OTHER COMPREHENSIVE INCOME (Notes) |
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE LOSS The following table sets forth the balance in accumulated other comprehensive loss for the period indicated:
(a) - All amounts are presented net of tax. (b) - Includes amounts related to supplemental executive retirement plan. (c) - We elected to adopt this guidance in the first quarter 2018, which allows a reclassification from accumulated other comprehensive income/loss to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act. After adopting and applying this guidance, our accumulated other comprehensive loss balance at March 31, 2018, does not include stranded taxes resulting from the Tax Cuts and Jobs Act. The following table sets forth the effect of reclassifications from accumulated other comprehensive loss in our Consolidated Statements of Income for the periods indicated:
(a) - These components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note H for additional detail of our net periodic benefit cost. |
EARNINGS PER SHARE EARNINGS PER SHARE (Notes) |
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Earnings Per Share [Text Block] | EARNINGS PER SHARE The following tables set forth the computation of basic and diluted EPS for the periods indicated:
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EMPLOYEE BENEFIT PLANS EMPLOYEE BENEFIT PLANS (Notes) |
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EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS The following tables set forth the components of net periodic benefit cost for our pension and postretirement benefit plans for the periods indicated:
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UNCONSOLIDATED AFFILIATES (Notes) |
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UNCONSOLIDATED AFFILIATES | UNCONSOLIDATED AFFILIATES Equity in Net Earnings from Investments - The following table sets forth our equity in net earnings from investments for the periods indicated:
Unconsolidated Affiliates Financial Information - The following table sets forth summarized combined financial information of our unconsolidated affiliates for the periods indicated:
We incurred expenses in transactions with unconsolidated affiliates of $37.5 million and $36.7 million for the three months ended March 31, 2018 and 2017, respectively, primarily related to Overland Pass Pipeline Company and Northern Border Pipeline. Accounts payable to our equity-method investees at March 31, 2018, and December 31, 2017, were $12.8 million and $13.6 million, respectively. Accounts receivable from our equity-method investees were $7.4 million at March 31, 2018, and were not material at December 31, 2017. Northern Border Pipeline - The Northern Border Pipeline partnership agreement provides that distributions to Northern Border Pipeline’s partners are to be made on a pro rata basis according to each partner’s percentage interest. The Northern Border Pipeline Management Committee determines the amount and timing of such distributions. Any changes to, or suspension of, the cash distribution policy of Northern Border Pipeline requires the unanimous approval of the Northern Border Pipeline Management Committee. Cash distributions are equal to 100 percent of distributable cash flow as determined from Northern Border Pipeline’s financial statements based upon EBITDA less interest expense and maintenance capital expenditures. Loans or other advances from Northern Border Pipeline to its partners or affiliates are prohibited under its credit agreement. Northern Border Pipeline entered into a settlement with shippers that was approved by the FERC in February 2018. The settlement provides for tiered rate reductions beginning January 1, 2018, that will reduce rates 12.5 percent by January 2020 compared with previous rates and requires new rates to be established by January 2024. We do not expect the resulting decrease in equity earnings and cash distributions from Northern Border Pipeline to be material to us. Overland Pass Pipeline Company - The Overland Pass Pipeline Company limited liability company agreement provides that distributions to Overland Pass Pipeline Company’s members are to be made on a pro rata basis according to each member’s percentage interest. The Overland Pass Pipeline Company Management Committee determines the amount and timing of such distributions. Any changes to, or suspension of, cash distributions from Overland Pass Pipeline Company requires the unanimous approval of the Overland Pass Pipeline Company Management Committee. Cash distributions are equal to 100 percent of available cash as defined in the limited liability company agreement. Roadrunner Gas Transmission - The Roadrunner limited liability company agreement provides that distributions to members are made on a pro rata basis according to each member’s ownership interest. As the operator, we have been delegated the authority to determine such distributions in accordance with, and on the frequency set forth in, the Roadrunner limited liability company agreement. Cash distributions are equal to 100 percent of available cash, as defined in the limited liability company agreement. During the three months ended March 31, 2017, we made contributions of $4 million to Roadrunner. We made no contributions to Roadrunner during the three months ended March 31, 2018. We have an operating agreement with Roadrunner that provides for reimbursement or payment to us for management services and certain operating costs. Reimbursements and payments from Roadrunner included in operating income in our Consolidated Statements of Income for the three months ended March 31, 2018 and 2017, were not material. |
COMMITMENTS AND CONTINGENCIES (Notes) |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Environmental Matters and Pipeline Safety - The operation of pipelines, plants and other facilities for the gathering, processing, transportation and storage of natural gas, NGLs, condensate and other products is subject to numerous and complex laws and regulations pertaining to health, safety and the environment. As an owner and/or operator of these facilities, we must comply with United States laws and regulations at the federal, state, local and tribal levels that relate to air and water quality, hazardous and solid waste management and disposal, cultural resource protection and other environmental matters. The cost of planning, designing, constructing and operating pipelines, plants and other facilities must incorporate compliance with these laws and regulations and safety standards. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and potentially criminal enforcement measures, including citizen suits, which can include the assessment of monetary penalties, the imposition of remedial requirements and the issuance of injunctions or restrictions on operation or construction. Management believes that, based on currently known information, compliance with these laws and regulations will not have a material adverse effect on our results of operations, financial condition or cash flows. Regulatory - The Tax Cuts and Jobs Act makes extensive changes to the U.S. tax laws and includes provisions that reduce the U.S. corporate tax rate to 21 percent from 35 percent, increase expensing for capital investment, and limit the interest deduction and use of net operating losses to offset future taxable income. The Tax Cuts and Jobs Act may reduce future tariff rates charged on our regulated pipelines. The rates charged to our customers have generally been established through shipper specific negotiation, discounts and negotiated settlements, which do not ascribe any specific cost of service elements. We expect future tariff rate changes, if any, related to the change in the U.S. corporate tax rate to be established prospectively over time on a similar negotiated basis. We will continue to monitor applicable FERC rule-making, including the March 2018 notice of proposed rule-making on the impact of the Tax Cuts and Jobs Act on FERC-regulated rates for natural gas pipelines, which is subject to a public comment process prior to being finalized. If in the future the FERC or other regulatory bodies were to require us to establish a regulatory liability for amounts previously collected on our regulated pipelines, then we would expect to record a regulatory liability through a one-time charge to expense. We also continue to monitor the FERC’s March 2018 revised policy statement for master limited partnerships, which no longer allows interstate natural gas and oil pipelines owned by master limited partnerships to recover an income tax allowance in cost of service rates. This revised policy remains pending at the FERC based on various requests for reconsideration or rehearing. We do not expect this FERC action to be material to our results of operations, as we are organized as a C-corporation. Further, regardless of organizational structure, we do not expect this FERC action to materially affect us, as the rates charged to our customers have generally been established through shipper specific negotiation, discounts and negotiated settlements, which do not ascribe any specific cost of service elements. The FERC allows regulated NGL pipelines an annual index adjustment to transportation rates, which is intended to allow recovery of changes in costs without a complicated cost of service filing. The FERC is expected to evaluate how best to incorporate the effects of new tax policies in its next calculation of the rate index in 2020, for indexing effective July 2021. We do not expect to be materially impacted by any such change in the index calculation, as our regulated NGL pipeline revenues are primarily under negotiated agreements. Legal Proceedings - Gas Index Pricing Litigation - As previously reported, in March 2017, the United States District Court for the District of Nevada (the Court) granted summary judgment to OESC in Sinclair Oil Corporation v. ONEOK Energy Services Company, L.P. (filed in the United States District Court for the District of Wyoming in September 2005, transferred to MDL-1566 in the Court). In September 2017, the Court entered a final judgment in favor of OESC in Sinclair, which was appealed by Sinclair Oil Corporation to the Ninth Circuit Court of Appeals. We expect that future charges, if any, from the ultimate resolution of the Sinclair case will not be material to our results of operations, financial position or cash flows. Other Legal Proceedings - We are a party to various other litigation matters and claims that have arisen in the normal course of our operations. While the results of these litigation matters and claims cannot be predicted with certainty, we believe the reasonably possible losses from such matters, individually and in the aggregate, are not material. Additionally, we believe the probable final outcome of such matters will not have a material adverse effect on our consolidated results of operations, financial position or cash flows. |
REVENUE REVENUE (Notes) |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues [Text Block] | REVENUES Adoption of ASC Topic 606: Revenue from Contracts with Customers - We adopted Topic 606 on January 1, 2018, using the modified retrospective method applied to those contracts, which were active as of January 1, 2018. Results for reporting periods beginning after January 1, 2018, are presented under Topic 606, while prior periods are not adjusted and continue to be reported under the accounting standards in effect for those periods. We recorded a net increase to the beginning balance of retained earnings of approximately $1.7 million as of January 1, 2018, due to the cumulative impact of adopting the standard, primarily related to the timing of revenue on transportation contracts with tiered rates that resulted in contract assets in our Natural Gas Pipelines segment, contributions in aid of construction from customers that resulted in contract liabilities and an adjustment to NGL inventory related to contractual fees in our Natural Gas Liquids Segment, as described below. Based on the new guidance, we determined that certain Natural Gas Gathering and Processing segment POP with fee contracts and Natural Gas Liquids segment exchange services contracts that include the purchase of commodities are supplier contracts. Therefore, contractual fees in these identified contracts are now recorded as a reduction to cost of sales and fuel pursuant to ASC 705 rather than as services revenue. To the extent we hold inventory related to these purchases, the related fees previously recorded in services revenue will not be recognized until the inventory is sold. We continue to be principal on the downstream sales of those commodities, which is unchanged from our assessment under previous guidance. The impact on our Consolidated Income Statement and Balance Sheet is as follows (in thousands):
Revenue Recognition - Revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. Our payment terms vary by customer and contract type, including requiring payment before products or services are delivered to certain customers. However, the term between customer prepayments, completion of our performance obligations, invoicing and receipt of payment due is not significant. Practical Expedients - We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) variable consideration on contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Receivables from Customers, Performance Obligations and Revenue Sources - The balances in accounts receivable on our Consolidated Balance Sheet at March 31, 2018, and December 31, 2017, include customer receivables of $832.1 million and $1.2 billion, respectively. Revenues sources are disaggregated in Note L and are derived from commodity sales and services revenues, as described below: Commodity Sales (all segments) - We contract to deliver residue natural gas, condensate, unfractionated NGLs and/or NGL products to customers at a specified delivery point. Our sales agreements may be daily or longer-term contracts for a specified volume. We consider the sale and delivery of each unit of a commodity an individual performance obligation as the customer is expected to control, accept and benefit from each unit individually. We record revenue when the commodity is delivered to the customer as this represents the point in time when control of the product is transferred to the customer. Revenue is recorded based on the contracted selling price, which is generally index-based and settled monthly. Services Gathering only contracts (Natural Gas Gathering and Processing segment) - Under this type of contract, we charge fees for providing midstream services, which include gathering our customer’s natural gas. Our performance obligation begins with delivery of raw natural gas to our system. This service is treated as one performance obligation that is satisfied over time. We use the output method based on delivery of product to our system as the measure of progress, as our services are performed simultaneously. POP contracts with producer take-in-kind rights (Natural Gas Gathering and Processing segment) - Under this type of contract, we do not control the stream of unprocessed gas that we receive at the wellhead due to the producer’s take-in-kind rights. We charge fees for providing midstream services, which include gathering and processing our customer’s natural gas. After performing these services, we return a portion of the natural gas to the producer and purchase the remaining commodities. Our performance obligation begins with delivery of raw natural gas to our system. This service is treated as one performance obligation that is satisfied over time. We use the output method based on delivery of product to our system as the measure of progress, as our services are performed simultaneously. Transportation and exchange contracts (Natural Gas Liquids segment) - Under this type of contract, we charge fees for providing midstream services, which may include a bundled combination of gathering, transporting and/or fractionation of our customer’s NGLs. Our performance obligation begins with delivery of unfractionated NGLs or NGL products to our system. These services represent a series of distinct services that are treated as one performance obligation that is satisfied over time. We use the output method based on delivery of product to our system as the measure of progress, as our services are performed simultaneously. For transportation services under a tariff on our NGL transportation pipelines, fees are recorded upon redelivery to our customer at the completion of the transportation services. Storage contracts (Natural Gas Liquids and Natural Gas Pipelines segments) - We reserve a stated storage capacity and inject/withdraw/store commodities for our customer. The capacity reservation and injection/withdrawal/storage services are considered a bundled service, as we integrate them into one stand-ready obligation provided on a daily basis over the life of the agreement and satisfied over time. Fixed capacity reservation fees are allocated and evenly recognized in revenue. Capacity reservation fees that vary based on a stated or implied economic index and correspond with the costs to provide our services are recognized in revenue based on daily effective fee rate. Transportation, injection and withdrawal fees are recognized in revenue as those services are provided and are dependent on the volume transported, injected or withdrawn by our customer, which is at our customer’s discretion. We use the output method based on the passage of time to measure satisfaction of the performance obligation associated with our daily stand-ready services. Firm service transportation contracts (Natural Gas Pipelines segment) - We reserve a stated transportation capacity and transport commodities for our customer. The capacity reservation and transportation services are considered a bundled service, as we integrate them into one stand-ready obligation provided on a daily basis over the life of the agreement and satisfied over time. Fixed capacity reservation fees are allocated and evenly recognized in revenue. Capacity reservation fees that vary based on a stated or implied economic index and correspond with the costs to provide our services are recognized in revenue based on a daily effective fee rate. If the capacity reservation fees vary solely as a contract feature, contract assets or liabilities are recorded for the difference between the amount recorded in revenue and the amount billed to the customer. Transportation fees are recognized in revenue as those services are provided and are dependent on the volume transported by our customer, which is at our customer’s discretion. We use the output method based on the passage of time to measure satisfaction of the performance obligation associated with our daily stand-ready services. Interruptible transportation contracts (Natural Gas Pipelines segment) - We agree to transport natural gas on our pipelines between the customer’s specified nomination and delivery points if capacity is available after satisfying firm transportation service obligations. Our performance obligations and those of our customer begin with delivery of natural gas onto our pipeline and is satisfied over time. The transaction price is based on the transportation fees times the volumes transported. These fees may change over time based on an index or other factors provided in the agreement. We use the output method based on delivery of product to the customer to measure satisfaction of the performance obligation. The total consideration for delivered volumes is recorded in revenue at the time of delivery, when the customer obtains control. Contract Assets and Contract Liabilities - Contract assets and contract liabilities are recorded when the amount of revenue recognized from a contract with a customer differs from the amount billed to the customer and recorded in accounts receivable. Our contract asset balances at the beginning and end of the period primarily relate to our firm service transportation contracts with tiered rates and were approximately $6.2 million and $6.4 million as of March 31, 2018, and January 1, 2018, respectively. At March 31, 2018, contract assets of $1.0 million and $5.2 million, are included in other current assets and other assets, respectively, in our Consolidated Balance Sheet. There have been no additions to our contract asset balance in 2018. Our contract liabilities primarily represent deferred revenue on NGL storage contracts for which revenue is recognized over a one-year term and deferred revenue on contributions in aid of construction received from customers for which revenue is recognized over the contract period, which averages approximately 10 years.
(a) - Balance includes $19.5 million of current liabilities. (b) - Contract liabilities of $6.0 million and $15.2 million are included in other current liabilities and other deferred credits, respectively, in our Consolidated Balance Sheet. Transaction Price Allocated to Unsatisfied Performance Obligations - The following table presents aggregate value allocated to unsatisfied performance obligations as of March 31, 2018, and the amounts we expect to recognize in revenue in future periods, related primarily to firm transportation and storage contracts with remaining contract terms ranging from one month to 26 years:
The table above excludes variable consideration allocated entirely to wholly unsatisfied performance obligations, wholly unsatisfied promises to transfer distinct goods or services that are part of a single performance obligation and consideration we determine to be fully constrained. Information on the nature of the variable consideration excluded and the nature of the performance obligations to which the variable consideration relates can be found in the description of the major contract types discussed above. The amounts we determined to be fully constrained relate to future sales obligations under long-term sales contracts where the transaction price is not known and minimum volume agreements, which we consider to be fully constrained until invoiced. |
SEGMENTS (Notes) |
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Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS | SEGMENTS Segment Descriptions - Our operations are divided into three reportable business segments, as follows:
Other and eliminations consist of corporate costs, the operating and leasing activities of our headquarters building and related parking facility and eliminations necessary to reconcile our reportable segments to our Consolidated Financial Statements. Accounting Policies - The accounting policies of the segments are described in Note A of the Notes to Consolidated Financial Statements in our Annual Report, updated as described in Note A of this Quarterly Report. Our chief operating decision-maker reviews the financial performance of each of our three segments, as well as our financial performance as a whole, on a regular basis. Adjusted EBITDA by segment is utilized in this evaluation. We believe this financial measure is useful to investors because it and similar measures are used by many companies in our industry as a measurement of financial performance and are commonly employed by financial analysts and others to evaluate our financial performance and to compare financial performance among companies in our industry. Adjusted EBITDA for each segment is defined as net income adjusted for interest expense, depreciation and amortization, noncash impairment charges, income taxes, allowance for equity funds used during construction, noncash compensation and other noncash items. This calculation may not be comparable with similarly titled measures of other companies. Customers - Our Natural Gas Gathering and Processing segment derives services revenue primarily from crude oil and natural gas producers, which include both large integrated and independent exploration and production companies. The downstream commodity sales customers of our Natural Gas Gathering and Processing segment are primarily utilities, large industrial companies, marketing companies and our NGL affiliate. Our Natural Gas Liquids segment’s customers are primarily NGL and natural gas gathering and processing companies; large integrated and independent crude oil and natural gas production companies; propane distributors; ethanol producers; and petrochemical, refining and NGL marketing companies. Our Natural Gas Pipelines segment’s customers are primarily local natural gas distribution companies, electric-generation companies, large industrial companies, municipalities, producers and marketing companies. For the three months ended March 31, 2018 and 2017, we had no single customer from which we received 10 percent or more of our consolidated revenues. Operating Segment Information - The following tables set forth certain selected financial information for our operating segments for the periods indicated:
(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $300.0 million, of which $253.4 million related to sales within the segment and cost of sales and fuel of $122.8 million. (b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $68.0 million and cost of sales and fuel of $9.1 million. (c) - Intersegment revenues for the Natural Gas Gathering and Processing, Natural Gas Liquids and Natural Gas Pipelines segments totaled $397.8 million, $9.0 million and $2.1 million respectively.
(a) - Noncustomer revenue for the three months ended March 31, 2018, totaled $(9.0) million related primarily to losses reclassified from accumulated other comprehensive income from derivatives on commodity contracts.
(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $296.3 million, of which $252.9 million related to sales within the segment and cost of sales and fuel of $116.5 million. (b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $68.9 million and cost of sales and fuel of $14.1 million.
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SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Notes) |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Condensed Consolidating Financial Information | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION ONEOK and ONEOK Partners are issuers of certain public debt securities. Effective with the Merger Transaction in 2017, we, ONEOK Partners and the Intermediate Partnership issued, to the extent not already in place, guarantees of the indebtedness of ONEOK and ONEOK Partners. The Intermediate Partnership holds all of ONEOK Partners’ partnership interests and equity in its subsidiaries, as well as a 50 percent interest in Northern Border Pipeline. In lieu of providing separate financial statements for each subsidiary issuer and guarantor, we have included the accompanying condensed consolidating financial statements based on Rule 3-10 of the SEC’s Regulation S-X. We have presented each of the parent and subsidiary issuers in separate columns in this single set of condensed consolidating financial statements. For purposes of the following footnote:
The following unaudited supplemental condensed consolidating financial information is presented on an equity-method basis reflecting the separate accounts of ONEOK, ONEOK Partners and the Intermediate Partnership, the combined accounts of the Non-Guarantor Subsidiaries, the combined consolidating adjustments and eliminations, and our consolidated amounts for the periods indicated. Condensed Consolidating Statements of Income
Condensed Consolidating Statements of Comprehensive Income
Condensed Consolidating Balance Sheets
Condensed Consolidating Statements of Cash Flows
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Basis of Accounting, Policy [Policy Text Block] | Our accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. These statements have been prepared in accordance with GAAP and reflect all adjustments that, in our opinion, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The 2017 year-end Consolidated Balance Sheet data was derived from our audited financial statements but does not include all disclosures required by GAAP. Certain reclassifications have been made in the prior-year financial statements to conform to the current year presentation. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements in our Annual Report. |
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New Accounting Pronouncements, Policy [Policy Text Block] | Recently Issued Accounting Standards Update - Changes to GAAP are established by the Financial Accounting Standards Board (FASB) in the form of ASUs to the FASB Accounting Standards Codification. We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or clarifications of ASUs listed below. We also exclude ASUs not yet adopted that were disclosed in our Annual Report to not materially impact us. The following tables provide a brief description of recent accounting pronouncements and our analysis of the effects on our financial statements:
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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Policies) |
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Fair Value Accounting Policy [Abstract] | |||||||||||||
Fair Value of Financial Instruments, Policy [Policy Text Block] | Determining Fair Value - We define fair value as the price that would be received from the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date. We use market and income approaches to determine the fair value of our assets and liabilities and consider the markets in which the transactions are executed. We measure the fair value of a group of financial assets and liabilities consistent with how a market participant would price the net risk exposure at the measurement date. While many of the contracts in our derivative portfolio are executed in liquid markets where price transparency exists, some contracts are executed in markets for which market prices may exist, but the market may be relatively inactive. This results in limited price transparency that requires management’s judgment and assumptions to estimate fair values. For certain transactions, we utilize modeling techniques using NYMEX-settled pricing data and implied forward LIBOR curves. Inputs into our fair value estimates include commodity-exchange prices, over-the-counter quotes, historical correlations of pricing data, data obtained from third-party pricing services and LIBOR and other liquid money-market instrument rates. We validate our valuation inputs with third-party information and settlement prices from other sources, where available. In addition, as prescribed by the income approach, we compute the fair value of our derivative portfolio by discounting the projected future cash flows from our derivative assets and liabilities to present value using interest-rate yields to calculate present-value discount factors derived from LIBOR, Eurodollar futures and the LIBOR interest-rate swaps market. We also take into consideration the potential impact on market prices of liquidating positions in an orderly manner over a reasonable period of time under current market conditions. We consider current market data in evaluating counterparties’, as well as our own, nonperformance risk, net of collateral, by using specific and sector bond yields and monitoring the credit default swap markets. Although we use our best estimates to determine the fair value of the derivative contracts we have executed, the ultimate market prices realized could differ from our estimates, and the differences could be material. The fair value of our forward-starting interest-rate swaps are determined using financial models that incorporate the implied forward LIBOR yield curve for the same period as the future interest-rate swap settlements. Fair Value Hierarchy - At each balance sheet date, we utilize a fair value hierarchy to classify fair value amounts recognized or disclosed in our financial statements based on the observability of inputs used to estimate such fair value. The levels of the hierarchy are described below:
Determining the appropriate classification of our fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data. We categorize derivatives for which fair value is determined using multiple inputs within a single level, based on the lowest level input that is significant to the fair value measurement in its entirety. |
EQUITY (Policies) |
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Jun. 30, 2017 | |
Equity [Abstract] | |
Partnership agreement | Cash Distributions - Prior to the consummation of the Merger Transaction, we received distributions from ONEOK Partners on our common and Class B units and our 2 percent general partner interest, which included our incentive distribution rights. |
SEGMENTS SEGMENTS (Policies) |
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Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Accounting Policy [Policy Text Block] | Accounting Policies - The accounting policies of the segments are described in Note A of the Notes to Consolidated Financial Statements in our Annual Report, updated as described in Note A of this Quarterly Report. Our chief operating decision-maker reviews the financial performance of each of our three segments, as well as our financial performance as a whole, on a regular basis. Adjusted EBITDA by segment is utilized in this evaluation. We believe this financial measure is useful to investors because it and similar measures are used by many companies in our industry as a measurement of financial performance and are commonly employed by financial analysts and others to evaluate our financial performance and to compare financial performance among companies in our industry. Adjusted EBITDA for each segment is defined as net income adjusted for interest expense, depreciation and amortization, noncash impairment charges, income taxes, allowance for equity funds used during construction, noncash compensation and other noncash items. This calculation may not be comparable with similarly titled measures of other companies. |
FAIR VALUE MEASUREMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recurring Fair Value Measurements | The following tables set forth our recurring fair value measurements for the periods indicated:
(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis. We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us. At March 31, 2018, we held no cash and posted $18.5 million of cash with various counterparties, including $0.7 million of cash collateral that is offsetting derivative net liability positions under master-netting arrangements in the table above. The remaining $17.8 million of cash collateral in excess of derivative net liability positions is included in other current assets in our Consolidated Balance Sheets.
(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis. We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us. At December 31, 2017, we held no cash and posted $49.7 million of cash with various counterparties, including $29.5 million of cash collateral that is offsetting derivative net liability positions under master-netting arrangements in the table above. The remaining $20.2 million of cash collateral in excess of derivative net liability positions is included in other current assets in our Consolidated Balance Sheets. |
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Reconciliation of Level 3 Fair Value Measurements | The following table sets forth a reconciliation of our Level 3 fair value measurements for the periods indicated:
(a) - Included in commodity sales revenues in our Consolidated Statements of Income. |
RISK MANAGEMENT AND HEDGING ACTIVITIES USING DERIVATIVES (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Derivatives | The following table sets forth the fair values of our derivative instruments presented on a gross basis for the periods indicated:
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Notional Amounts of Derivative Instruments | The following table sets forth the notional quantities for derivative instruments held for the periods indicated:
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Schedule of Cash Flow Hedging Instruments Effect on Comprehensive Income (Loss) | The following table sets forth the unrealized effect of cash flow hedges recognized in other comprehensive income (loss) for the periods indicated:
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Schedule of Cash Flow Hedging Instruments Effect on Income | The following table sets forth the effect of cash flow hedges in our Consolidated Statements of Income for the periods indicated:
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DEBT DEBT (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt [Table Text Block] | The following table sets forth our consolidated debt for the periods indicated:
(a) - Individual issuances of commercial paper under our commercial paper program generally mature in 90 days or less. These issuances are supported by and reduce the borrowing capacity under our $2.5 Billion Credit Agreement. |
EQUITY (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of distributions made to general or limited partner | The following table sets forth ONEOK Partners’ distributions paid during the period prior to the closing of the Merger Transaction:
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | The following table sets forth the balance in accumulated other comprehensive loss for the period indicated:
(a) - All amounts are presented net of tax. (b) - Includes amounts related to supplemental executive retirement plan. (c) - We elected to adopt this guidance in the first quarter 2018, which allows a reclassification from accumulated other comprehensive income/loss to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act. After adopting and applying this guidance, our accumulated other comprehensive loss balance at March 31, 2018, does not include stranded taxes resulting from the Tax Cuts and Jobs Act. |
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Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following table sets forth the effect of reclassifications from accumulated other comprehensive loss in our Consolidated Statements of Income for the periods indicated:
(a) - These components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note H for additional detail of our net periodic benefit cost. |
EARNINGS PER SHARE EARNINGS PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | The following tables set forth the computation of basic and diluted EPS for the periods indicated:
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EMPLOYEE BENEFIT PLANS EMPLOYEE BENEFIT PLANS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Defined Benefit Plan [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic benefit cost for pension and postretirement benefit plans | The following tables set forth the components of net periodic benefit cost for our pension and postretirement benefit plans for the periods indicated:
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UNCONSOLIDATED AFFILIATES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity In Net Earnings From Investments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Table Text Block] | The following table sets forth our equity in net earnings from investments for the periods indicated:
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Unconsolidated Affiliates Financial Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Table Text Block] | The following table sets forth summarized combined financial information of our unconsolidated affiliates for the periods indicated:
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REVENUE REVENUE (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Table Text Block] | The impact on our Consolidated Income Statement and Balance Sheet is as follows (in thousands):
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Revenue, Initial Application Period Cumulative Effect Transition [Table Text Block] |
(a) - Balance includes $19.5 million of current liabilities. (b) - Contract liabilities of $6.0 million and $15.2 million are included in other current liabilities and other deferred credits, respectively, in our Consolidated Balance Sheet. |
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Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block] | The following table presents aggregate value allocated to unsatisfied performance obligations as of March 31, 2018, and the amounts we expect to recognize in revenue in future periods, related primarily to firm transportation and storage contracts with remaining contract terms ranging from one month to 26 years:
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SEGMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | The following tables set forth certain selected financial information for our operating segments for the periods indicated:
(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $300.0 million, of which $253.4 million related to sales within the segment and cost of sales and fuel of $122.8 million. (b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $68.0 million and cost of sales and fuel of $9.1 million. (c) - Intersegment revenues for the Natural Gas Gathering and Processing, Natural Gas Liquids and Natural Gas Pipelines segments totaled $397.8 million, $9.0 million and $2.1 million respectively.
(a) - Noncustomer revenue for the three months ended March 31, 2018, totaled $(9.0) million related primarily to losses reclassified from accumulated other comprehensive income from derivatives on commodity contracts.
(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $296.3 million, of which $252.9 million related to sales within the segment and cost of sales and fuel of $116.5 million. (b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $68.9 million and cost of sales and fuel of $14.1 million.
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SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statements of Income | Condensed Consolidating Statements of Income
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Condensed Consolidating Statements of Comprehensive Income | Condensed Consolidating Statements of Comprehensive Income
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Condensed Consolidating Balance Sheets | Condensed Consolidating Balance Sheets
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Condensed Consolidating Statements of Cash Flows | Condensed Consolidating Statements of Cash Flows
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares |
3 Months Ended | 6 Months Ended | 12 Months Ended |
---|---|---|---|
Mar. 31, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
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Entity Information [Line Items] | |||
Common Stock, Shares, Issued | 445,016,234 | 423,166,234 | |
Business Acquisition, Description of Acquired Entity | On June 30, 2017, we completed the acquisition of all of the outstanding common units of ONEOK Partners that we did not already own at a fixed exchange ratio of 0.985 of a share of our common stock for each ONEOK Partners common unit. We issued 168.9 million shares of our common stock to third-party common unitholders of ONEOK Partners in exchange for all of the 171.5 million outstanding common units of ONEOK Partners that we previously did not own. As a result of the completion of the Merger Transaction, common units of ONEOK Partners are no longer publicly traded. | ||
General partnership ownership interest | 100.00% | 41.20% | 100.00% |
FAIR VALUE MEASUREMENTS - Part 2 (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
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Fair Value, Assets And Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract] | ||
Net assets (liabilities) at beginning of period | $ (32,838) | $ (23,319) |
Total realized/unrealized gains (losses): | ||
Included in earnings | (85) | 913 |
Included in other comprehensive income (loss) | 36,021 | 21,634 |
Net assets (liabilities) at end of period | 3,098 | (772) |
Transfers between levels | $ 0 | $ 0 |
EARNINGS PER SHARE EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
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Basic EPS | ||
Net income attributable to ONEOK available for common stock | $ 264,233 | $ 87,361 |
Shares | 409,676 | 211,619 |
Basic (in dollars per share) | $ 0.65 | $ 0.41 |
Diluted EPS | ||
Effect of dilutive securities | $ 0 | $ 0 |
Effect of dilutive securities, number of shares, shares | 2,497 | 1,983 |
Net income attributable to ONEOK available for common stock and common stock equivalents | $ 264,233 | $ 87,361 |
Shares | 412,173 | 213,602 |
Earnings Per Share, Diluted | $ 0.64 | $ 0.41 |
EMPLOYEE BENEFIT PLANS EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
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Pension Benefits | ||
Components of net periodic benefit cost | ||
Service cost | $ 1,832 | $ 1,722 |
Interest cost | 4,408 | 4,655 |
Expected return on plan assets | (5,969) | (5,336) |
Amortization of prior service credit | 0 | 0 |
Amortization of net loss | 4,258 | 3,392 |
Net periodic benefit cost (income) | 4,529 | 4,433 |
Postretirement Benefits | ||
Components of net periodic benefit cost | ||
Service cost | 211 | 165 |
Interest cost | 527 | 565 |
Expected return on plan assets | (672) | (564) |
Amortization of prior service credit | (415) | (415) |
Amortization of net loss | 334 | 420 |
Net periodic benefit cost (income) | $ (15) | $ 171 |
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